TENANT PROTECTION ACT, 1996 / LOI DE 1996 SUR LA PROTECTION DES LOCATAIRES
STATEMENT BY THE MINISTER AND RESPONSES
COALITION TO SAVE TENANTS' RIGHTS
BUILDING AND CONCRETE RESTORATION ASSOCIATION OF ONTARIO
CENTRE FOR EQUALITY RIGHTS IN ACCOMMODATION
URBAN DEVELOPMENT INSTITUTE OF ONTARIO
CONTENTS
Thursday 12 June 1997
Subcommittee report
Tenant Protection Act, Bill 96 Mr Leach / Loi de 1996 sur la protection des locataires, projet de loi 96 M Leach
Statement by the minister and responses
Hon Al Leach, Minister of Municipal Affairs and Housing
Progressive Conservative Party: Mr Gilchrist, Mr Stewart, Mr Wettlaufer
Liberal Party: Mr Duncan, Mr Sergio, Mr Colle
New Democratic Party: Ms Churley, Mr Marchese
Goldlist Development Corp
Mr George Goldlist
Mr Michael Walker
Coalition to Save Tenants' Rights
Ms Elinor Mahoney
Ms Barbara Hurd
Ontario Advocacy Coalition
Ms Patti Bregman
Ms Linda Davis-Bonar
Mrs Sheila Jacobson
Building and Concrete Restoration Association of Ontario
Mr Murray Gamble
Mr Michael Ornstein
Centre for Equality Rights in Accommodation
Mr Bruce Porter
Urban Development Institute of Ontario
Mr Stephen Kaiser
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair / Président: Mr David Tilson (Dufferin-Peel PC)
Vice-Chair / Vice-Présidente: Mrs Julia Munro (Durham-York PC)
Mr MikeColle (Oakwood L)
Mr HarryDanford (Hastings-Peterborough PC)
Mr CarlDeFaria (Mississauga East / -Est PC)
Mr EdDoyle (Wentworth East / -Est PC)
Mrs BarbaraFisher (Bruce PC)
Mr TomFroese (St Catharines-Brock PC)
Mr SteveGilchrist (Scarborough East / -Est PC)
Mr MichaelGravelle (Port Arthur L)
Mr RosarioMarchese (Fort York ND)
Mrs JuliaMunro (Durham-York PC)
Mr MarioSergio (Yorkview L)
Mr R. GaryStewart (Peterborough PC)
Mr DavidTilson (Dufferin-Peel PC)
Mr LenWood (Cochrane North / -Nord ND)
Substitutions present /Membres remplaçants présents:
Ms MarilynChurley (Riverdale ND)
Mr DwightDuncan (Windsor-Walkerville L)
Mr WayneWettlaufer (Kitchener PC)
Also taking part /Autres participants et participantes:
Mr PeterKormos (Welland-Thorold ND)
Clerk / Greffier: Mr Tom Prins
Staff /Personnel: Mr Jerry Richmond, Legislative Research Service
The committee met at 1002 in committee room 1.
SUBCOMMITTEE REPORT
The Chair (Mr David Tilson): Good morning, ladies and gentlemen. This is the standing committee on general government. We are here today to review Bill 96, An Act to Consolidate and Revise the Law with respect to Residential Tenancies. Members of the committee, you should have an agenda before you. We will soon have a copy of the report of the subcommittee. I'm going to ask Mr Gilchrist to read that report to the members.
Mr Steve Gilchrist (Scarborough East): The subcommittee met on Thursday, June 5, 1997 and agreed to the following:
(1) That the clerk will have an advertisement placed one time in the local newspaper of each city that the committee will travel to. In Toronto an ad will be placed in the Star and the Sun. The Toronto ads will be placed as soon as possible after the bill has been referred to the committee. In the areas outside Toronto, the ad will be placed in the paper three weeks before the committee arrives in that city. The Chair, in consultation with the clerk, will decide upon the wording of the ad.
(2) That an advertisement be placed on the Ontario parliamentary channel and that a press release be issued. The press release will also be mailed to each city the committee is travelling to.
(3) That the minister be offered 15 minutes in which to make a presentation. Each of the three parties will then have 15 minutes to make opening statements. The Progressive Conservative Party will make the first statement, followed by the two opposition parties.
(4) That the committee will meet in Toronto for public hearings on June 12, 19, and 26, 1997. The meetings will commence at 10 am and after routine proceedings.
(5) That the committee will have eight more days of public hearings, the specific calendar dates of which have yet to be determined. During the summer recess, the committee will have hearings in the following locations: Monday, Toronto; Tuesday, Ottawa; Wednesday, Sudbury; Thursday, Thunder Bay; Monday, Toronto; Tuesday, Hamilton; Wednesday, Windsor; Thursday, London.
(6) That the Chair, in consultation with the clerk, is authorized to make changes to this schedule in order to accommodate the travel arrangements.
(7) That organizations will be offered 20 minutes in which to make a presentation and individuals will be offered 15 minutes for their presentations. The Chair, in consultation with the clerk, will make any decisions necessary to determine who should be scheduled as a group or as an individual.
(8) Scheduling will be accomplished by means of four lists. One list will be created by each party and the fourth list will contain the names of those people not chosen by any party. Each party will supply the clerk with a list outlining who they wish to hear from at each location. These lists will each contain only the number of names sufficient to fill one quarter of the agenda. The remainder of spaces available on the agenda will be selected randomly from the fourth list.
(9) That the Chair, in consultation with the clerk, will determine if the agenda for a specific location is sufficiently booked to warrant the committee meeting in that location.
(10) That the deadline for witnesses to request a hearing during the summer recess will be one week before the committee arrives in that city. For the Toronto hearings the deadline is one week before the first Toronto day of hearings.
(11) That the deadline for written submissions will be on the last day of travel.
(12) That each party will supply the clerk with 12 names chosen from the list distributed at the subcommittee meeting by 12 noon on Friday 6 June 1997. These names will then be used to schedule the witnesses for the public hearings on June 12, 19 and 26, 1997. If more than 12 names are submitted by any party, these names then become that party's choice of witnesses for the two remaining Toronto dates occurring in the summer recess.
(13) That requests by witnesses to have their expenses paid by the committee will be decided by the subcommittee after their request has been made to the Clerk in writing.
(14) That the legislative research officer will prepare summaries for the committee at the end of June and at the end of the public hearings. An additional summary may be requested by the committee at a later date.
(15) That the Chair is authorized to begin the meetings even if there is not representation from all three parties.
(16) That there is no need for a technical briefing from the ministry staff.
(17) That there will be no opening statements during the clause-by-clause consideration of the bill.
(18) That this subcommittee report will be the first order of business on the June 12, 1997, meeting.
(19) That the clerk has the authority to place the ad in the necessary papers and to begin scheduling immediately.
(20) That the information contained in this subcommittee report may be given out to interested people immediately, as opposed to after the committee has voted on it.
Mr Chair, that forms the subcommittee report. I'm prepared to move that. I believe we have a consensus throughout the three parties.
The Chair: Discussion?
Mr Rosario Marchese (Fort York): Mr Chair, I agree with everything we have agreed to in subcommittee but would like to make a request, and hope that Mr Gilchrist and others will agree. We said that as we travel across the province we should try to have the hearings late enough that we could get people who can't make it in the day. That's why we said until 7 o'clock most of the time in most places.
It may happen if we have enough requests from people where they can't make it in the day -- and we have more people who want to come in the evening than the day -- that in the subcommittee we should review that in order to accommodate that to the extent we can. That would be the first request.
The other is, if we have noticed that in Thunder Bay, for example, we only have several requests and not enough to fill the day, we should then consider moving from Thunder Bay to Kitchener, where we have a lot of tenants who are likely to want to speak to this issue. I would ask you if you could give a commitment for us to review that. If there are insufficient requests from Thunder Bay, I would like to suggest we change Thunder Bay to Kitchener.
The Chair: Mr Marchese, I believe we discussed some of these things in the subcommittee and some of those issues are being left to the discretion of the Chair and the clerk.
Mr Marchese: The first one we did discuss, Mr Chair; the second one we did not.
The Chair: Yes, we did. With respect to the hours, I hope you can appreciate we will always have problems with respect to travelling, going from one community to another. But I have no problem, subject to what other members of the committee say, with respect to that request.
I believe Mr Duncan is first.
Mr Marchese: But Mr Tilson, with due respect of course, we did not discuss both of these matters. I would like somebody else to agree or disagree.
The Chair: It's right here --
Mr Marchese: Mr Tilson, hold on. We discussed the issue of time, but we did not discuss the second matter I raised, which is, if Thunder Bay is a problem in terms of deputations, that we would go somewhere else. We didn't talk about that.
The Chair: I understand, Mr Marchese.
Mr Dwight Duncan (Windsor-Walkerville): We discussed that issue. I would concur with the government. We did discuss these two issues. We would support and hope the government will be sensitive to accommodating delegations in the evening, and also we've discussed and I've sent a letter indicating that if we don't have enough delegations in Thunder Bay or wherever, hopefully the government will give some consideration to Kitchener-Waterloo. We've had representations from a number of people in those communities as well.
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Mr Gilchrist: Mr Marchese, I'm sorry that they were photocopying and you didn't have it in front of you. Point 9 in the subcommittee report is specifically, "That the Chair, in consultation with the clerk, will determine if the agenda for a specific location is sufficiently booked to warrant the committee meeting in that location." It is addressed.
We will note the fact that you have indicated Toronto and the official opposition has indicated Kitchener as your respective first choices as an alternative if any location has insufficient numbers. I certainly give you the undertaking that that and the hours issue will be something we respond to positively.
The Chair: How are you leaving this, Mr Marchese? Are you satisfied?
Mr Marchese: Yes, I am.
The Chair: All those in favour of receiving the report? It is carried.
TENANT PROTECTION ACT, 1996 / LOI DE 1996 SUR LA PROTECTION DES LOCATAIRES
Consideration of Bill 96, An Act to Consolidate and Revise the Law with respect to Residential Tenancies / Projet de loi 96, Loi codifiant et révisant le droit de la location à usage d'habitation.
STATEMENT BY THE MINISTER AND RESPONSES
The Chair: For the second item on the agenda, and we're already 15 minutes late, I would like to welcome the Minister of Municipal Affairs and Housing, the Honourable Al Leach, who is going to start off with respect to this bill in making a presentation to members of the committee. Welcome.
Hon Al Leach (Minister of Municipal Affairs and Housing): Thank you, Mr Chair, and good morning, ladies and gentlemen and all members of the committee. It's nice to see you all again. I am pleased to be here today for the start of the public hearings on Bill 96, the Tenant Protection Act. I'd like to use this opportunity to explain why we are reforming Ontario's rent regulation system and how we plan to fix it.
I have a sense of déjà vu today all over again, as Yogi Berra would say, and for good reason. As those of you who were on the standing committee last summer will recall, I was before this committee at that time for the opening of public hearings on this very issue. At that time, the committee conducted public hearings in nine communities on our discussion paper on Ontario's rent regulation system, entitled New Directions.
You heard from all sides of the issue: from tenants, property owners, the business community and taxpayers. My ministry also received more than 400 written submissions from across the province.
So why are we here again? Why are we doing two rounds of public hearings on the same issue? Landlord and tenant regulation is a complex issue, as most of us recognize. There is a lot at stake for everyone involved. We know the system needs to be changed and we want to make sure we get it right. That means listening closely to what everyone says and taking the best, most workable ideas. We have listened to what we've heard so far, and the proposed legislation, Bill 96, takes a seriously flawed system of rent regulation and improves it. This legislation balances the interests of tenants and property owners, and balance is crucial to a successful system of rent regulation and other landlord and tenant issues.
As a result of the discussion paper, we have also made some changes to the proposed legislation. These changes were based on the extensive public consultations and I will highlight these changes in a few minutes.
First, let me review what's wrong with the current system. Right now, both tenants and property owners must deal with a seriously flawed system. Let me give you just a few examples.
Our rental housing stock is run down. More than $10 billion in repairs is needed to rental buildings across Ontario.
Maintenance is poor. There are apartment buildings across the province with dozens of outstanding work orders.
Interruption.
The Chair: We want to hear what the minister is saying. I'm afraid we have rules in this place that are the same as in the House. We can't have interjections from the audience, so I ask for your cooperation to allow the minister to make his presentation.
Hon Mr Leach: New rental construction is scarce. There is little investment in rental housing, with a mere handful of new apartments being built each year.
Finally, vacancy rates in many of our cities are extremely low. This leaves tenants with very few choices of where to live.
Clearly there are very serious problems, and this government is committed to doing something about them. So what about solutions? During the public consultations I talked with many tenants and property owners. Not surprisingly, they rarely shared the same view. Both sides want it all their own way. While we try to give everybody what they want, we have come up with a new system of rent regulation that will fix the system in a balanced and fair way for both tenants and landlords. Let me now outline some of its key features.
The tenant protection legislation before these public hearings has four main goals:
First, we want to protect tenants from unfair rent increases and arbitrary eviction.
Second, we want to improve maintenance and get tough on landlords who fail to take care of their buildings.
Third, we want to create a climate where people will invest in new rental housing. This, in turn, would give tenants more and better choices of where to live.
Fourth, we want to streamline administration and cut red tape to create a faster, fairer, less costly system of rent control. This law will combine six existing pieces of legislation and will substantially amend two other statutes.
Under the proposed Tenant Protection Act, tenants would continue to enjoy many valuable protections. The new law will continue to protect tenants from unfair rent increases by keeping the annual rent control guideline. The guideline is 2.8% this year, the lowest guideline in the entire history of rent control in Ontario.
Some other protections worth noting include:
Tenants are protected by a cap on rent increases above the guideline for capital repairs.
Tenants can receive only one rent increase each year.
Tenants must be given proper notice of a rent increase.
Tenants can apply for a rent refund for poor maintenance, or a lower rent for reduced services.
Tenants can apply to challenge illegal rent increases and illegal extra charges.
All these protections and many others remain in place for a tenant as long as the tenant continues to live in the apartment. When a tenant moves out and the apartment becomes vacant, the property owner can negotiate a new rent with the new tenant. When the new tenant moves in, that tenant will be protected by rent control and all the protections afforded to all other tenants. In essence, we are moving from a system that protects the apartment to a system that protects the individual.
It has been suggested that property owners will take advantage of this opportunity to increase rents by evicting tenants. That's hardly the case. First of all, tenants are protected from arbitrary eviction. There are specific reasons laid out in the Landlord and Tenant Act for the eviction of a tenant, and these involve serious violations of the landlord-tenant relationship. The new Tenant Protection Act would continue the same protection from arbitrary eviction that tenants currently enjoy.
It has also been suggested that property owners will harass tenants in order to get them to move out of their units so the rent can be increased. If harassment occurs, an enforcement unit in my ministry takes action. The current maximum fine for a corporate landlord convicted of harassing a tenant is $25,000. Under the new Tenant Protection Act we would strengthen the enforcement unit and double the maximum fine to $50,000.
Others claim that property owners will try to force tenants out of their units by refusing to do any maintenance. The idea is to make the conditions so bad that tenants will have to move out. I would like to make the point that few landlords would allow their buildings to go into disrepair just to get a tenant to move out. But there are other provisions in the current rent control system which deal with poor maintenance in rental buildings, and as we all know, the current system isn't working very well. What we have done with Bill 96 is change the system to ensure buildings are maintained. Let me explain.
First, we've created a system in which property owners will have to compete for new tenants. That's an important change. There has not been any competition for tenants among property owners in many years, and it's a critical aspect of a healthy rental market. Under the proposed new law, when a tenant moves out of an apartment, the property owner can negotiate a new rent with the incoming tenant. Obviously, if the building is falling apart, the property owner is going have a difficult time attracting a new tenant.
Second, we have changed the system to allow a property owner to recover the money that is spent on repairs. The new legislation places a higher cap -- 4%, up from 3% -- on the amount above the rent control guideline that a tenant's rent can be increased for capital repairs, and that amount can be carried forward for an indefinite period until the repairs are paid for. Under the current system, it is not surprising that some property owners are not doing repairs to their buildings. The current system allows a property owner to recover very little of the money spent on repairs.
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We're going to change the system a third way: We're going to get tough with property owners who fail to take care of their buildings. We're improving the ability of municipalities to enforce their property standards bylaws. We're doubling the maximum fine for property standards violations such as failing to comply with a municipal work order. Under Bill 96 the maximum fine would be $100,000 for repeat offences by a corporate landlord. Also, we're speeding up the process. Instead of having to first serve a property owner with a notice of violation, Bill 96 would give local property standards officers the power to immediately issue a work order.
We are streamlining some of the procedures. The Tenant Protection Act would make it easier to recover the cost of municipal repair work carried out in emergencies and easier to recover the cost of work carried out in those cases where the property owner doesn't comply with a work order.
I'd like to turn now to some of the very significant changes we've made following the extensive consultations held on the discussion paper New Directions last summer. One of those changes involves the maintenance provisions that I just touched upon. Initially we planned to make it an offence for a property owner simply to violate a maintenance standard. Municipalities could have issued tickets on the spot, without giving the property owner any opportunity to fix the problem before facing fines. People felt this approach would not be fair and so we have changed the legislation to give property owners the opportunity to fix the problem before a charge is laid.
Another issue we're hearing about involves condominium conversions. It is being suggested that under the proposed Tenant Protection Act property owners would simply convert their rental buildings to condominiums and evict tenants in that way. This will not be the case. If a property owner wants to convert a rental building to a condominium, then the tenants of that building would have the right of first refusal to purchase their apartment. Those tenants who do not wish to purchase their apartments will have lifetime tenure in that unit. This too is an aspect of the legislation which came about as a result of the public consultation last summer. In addition, municipalities can still discourage condominium conversions through their official plan policies if they feel it is not in the best interests of their community. I can say right now that the city of Toronto has such an official plan policy.
To summarize, Bill 96, the Tenant Protection Act, is legislation that continues to protect tenants while solving the problems of the current system. This legislation will cut red tape, improve maintenance, help to encourage investment in new rental housing and give the taxpayer a workable system at a reasonable cost.
We look forward to listening to what the public has to say and we look forward to making the legislation the best possible for the tenant, the property owner and the taxpayers of Ontario. Thank you, Mr Chairman.
The Chair: As agreed, Mr Gilchrist will make comments on behalf of the PC caucus.
Mr Gilchrist: Minister, I appreciate your laying out the framework of the bill here as we start our first day of these hearings. As someone who wasn't able to sit in on the first round of discussions, I particularly value the outline you've provided and I look forward to hearing from the individuals who will be coming before us. I wonder, though, if you might expand on some of the points you made in your opening comments.
I've had an opportunity to read the submissions made to the white paper that you put out earlier. I guess in anticipation of perhaps hearing those same comments again, I'm a little concerned about a couple of issues where it would appear that the facts are either not widely known or are somehow not being taken into account by some critics of the need for change.
It is my understanding that across all of Metro last year there was something in the neighbourhood of 36 or 37 apartment housing units, not buildings but units, constructed at the same time the population of the city increased by something close to 50,000, and that across the province there were somewhere in the neighbourhood of 1,420 units built and the province increased by 120,000. It would seem that we do not, under the current law, have any kind of incentive for people to build new apartment units. Clearly, with an increasing population, that's going to have a dramatic impact on the ability of people to find affordable and, quite frankly, acceptable housing.
First off, as you look back in the history of rent control, is there a correlation between the degree to which the government has intruded in the marketplace and the reduction in the construction of new housing units? Secondly, you outlined in your comments that there are a number of steps being taken to improve the incentives to create new apartment units, multi-unit housing complexes. I wonder if you could outline in greater detail some of those other steps as well.
Hon Mr Leach: I don't think there's any doubt that rent control has --
Interruption.
The Chair: Ladies and gentlemen, I've got to have cooperation from the people here to hear the questions and the answers. Interjections from the audience are not allowed. Please, may I have your cooperation. Minister.
Hon Mr Leach: I think there isn't any doubt that rent control is one of the issues that has curtailed the construction of new rental units, but it's only one of the issues and we're very quick to point that out. There are a number of other issues that have to be addressed to get the development industry back into building apartments, and this government is going to address all of those issues.
Some of them are beyond our control. For example, for some unknown reason the GST on building an apartment is 8%; if you're building a condominium it's 5%. We've approached the federal government to try and get that rectified. We believe it should be an even playing field, that there shouldn't be any difference in the GST on a condo and on a rental building. As a matter of fact, I would encourage the members of the Liberal caucus to lend their support in approaching the federal government in trying to level that playing field.
The other major issue is property taxes. The property taxes on a rental unit can be as much as four times that of a single-family dwelling. We have brought in legislation and given the municipalities the opportunity to level that playing field as well. Property taxes account for about 40% of rent, so if property taxes can be reduced, rents could be reduced as well. Municipalities will now have the opportunity to level that playing field.
We've done a number of other things: development charges, for example; working with municipalities on the building code to make sure we can have the best possible legislation in place to encourage the development industry to get back into the building business. In the 1970s we were building 25,000 units a year. As you mentioned, last year in Toronto there were 37 units built. It's just not acceptable.
Mr Gilchrist: It strikes me as somewhat ironic. I have witnessed in my riding of Scarborough East a tremendous deterioration in much of the apartment housing stock over the last 22 years that I have lived there. There's no doubt that under the current bill that's in place in Ontario today there does not appear to be an incentive for landlords, both public and private, to be making the kind of investments in their buildings to ensure the highest standard of health and safety and aesthetics in those buildings. Clearly those who would defend the status quo are on the horns of a dilemma because that is to defend that deterioration in the housing stock. How do you see this bill improving the ability of tenants to have access to well-maintained and well-repaired apartment housing units?
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Hon Mr Leach: By the way, I'd like to point out that 80% of apartment buildings are six units or less and are owned by small businessmen who have invested their income to get a return on their investment. If under the current laws they can't get the money back that they invest, then they're not going to invest it. The same goes for maintenance. If they have to carry out maintenance and the maintenance is going to cost more than they can get back, then they do everything in their means to avoid doing that maintenance. So you have to provide the ways and means for people to get a reasonable return on their investment.
A good analogy I think is if you look at a rental office building in Toronto and you look at a rental residential building. In the commercial building there's every incentive to do good maintenance because that's the only way you're going to attract good tenants. In the residential building there's no incentive whatsoever. You can invest your money and you don't get any opportunity to get it back, so you don't invest it. This bill levels out that playing field again.
Mr R. Gary Stewart (Peterborough): Thank you, Minister, for appearing. I had the pleasure I guess, whatever you wish to call it, of sitting on the hearings last fall when we travelled around the country. One of the big concerns that many people in the province have is that we are not out listening to the people. I can assure you, after about three weeks, that we were out listening.
After those hearings were completed and on the draft, what type of consultation or input or whatever, other than what you talked about -- you had something like 400 letters come to the ministry -- did the public have when we finally got down to this proposal in this bill?
Hon Mr Leach: Obviously, after the time you spent on the road last spring, and there were numerous deputations at that time, all the input from those deputations was taken into consideration. We made a number of changes to the legislation as a result of those deputations. We also consulted directly with some tenants' organizations and with landlord organizations as well, gave them an opportunity to review the new draft legislation, and made further revisions after that. I think the Tenant Protection Act has probably had more consultation than just about any other bill this government has brought forward.
Mr Stewart: Another thing, if I may ask -- and I'm going to talk about rental units outside of Toronto, because there is a country outside of Toronto, part of which I represent. It was interesting, as we wandered around the country last fall on those hearings, that the vacancy rate had been increasing in a lot of the smaller areas. One of the concerns we heard was that in the late 1980s the previous Liberal government's rent control legislation allowed 30%, 40%, 50% increases, and certainly the various opposition parties are suggesting that this could happen under this bill, much the same as it did under the previous Liberal government. Can you make some comments on why you feel those allegations are not factual?
Hon Mr Leach: What we've done in this bill is to ensure that for landlords to get approval for the 4% capital cap, the work undertaken must be of benefit to the tenants. It can't be for window dressing. It can't be for the marble foyers and the gold-plating. It has to be something that they can justify is to the benefit of the tenants in the building. That's a very important difference from what was in the legislation in place in 1988. In 1988-89 there were increases under that legislation that caused rent increases of up to 100% and a flip of apartment buildings, gold-plating of utilities and marble lobbies that provided absolutely no benefit to the tenant but allowed the landlords to increase their rents dramatically. The legislation we're bringing in protects tenants from that.
The Chair: One final question. Mr Wettlaufer.
Mr Wayne Wettlaufer (Kitchener): Minister, I'm like Gary Stewart here. I come from outside of Toronto, the fastest-growing area of Ontario, Kitchener-Waterloo. During the course of the hearings last summer the NDP were constantly commenting about the Russell report and the fact that the Russell report quoted a 10% average return on equity for landlords over the course of the last 10 years. Do you want to comment on that?
Hon Mr Leach: We contacted the people who put out the Russell report and they were shocked that someone would use their report to indicate a rate of return.
Mr Marchese: Shocked? We quoted them.
Hon Mr Leach: Yes. I have their letter right here, as a matter of fact. Their sample size was 25 units, totally statistically unacceptable to try and draw any conclusion whatsoever. They had done their report for a specific purpose and that purpose was not to try and establish a rate of return.
We were quite surprised when we heard the NDP talk about a 10% rate of return and that's why we contacted Frank Russell Canada Ltd to find out what their report actually did conclude and what it was based on. They provided that to us and the rate of return is somewhere between 2% and 4%.
The Chair: Any further comments from the Conservative caucus? Then Mr Sergio or Mr Duncan?
Mr Mario Sergio (Yorkview): Mr Duncan first.
Mr Duncan: I just want to begin by saying that I will use about nine minutes of our time and my two colleagues will split the other six minutes, if that's permitted in the rules.
The Chair: Somehow we're behind schedule, but that's not your fault. We'll do our best.
Mr Duncan: The minister made the point, asked a rhetorical question in his statement: "Why two rounds of hearings?" We have reviewed the discussions that took place last summer and know there has been very little changed and that this government's mindset has been the same since the minister said on October 19, 1995, to the Ontario Home Builders' Association --
Hon Mr Leach: Rent control has got to go.
Mr Duncan: -- "I've said it before and I'll say it again, rent control has got to go." So when we hear the minister talk about a bill that protects rent control, we know full well that is yet another spin doctor's way of trying to make the public believe something that isn't there. I'd like to spend a few minutes to speak about what's in the bill and what isn't in the bill and what we think the government ought to be contemplating.
Make no mistake, this bill is about getting rid of rent control. There is no question, no ifs, ands or buts about it. Lampert tells us that within the first five years, 70% of rental units, particularly in large urban centres such as Toronto, will turn over; that in fact once that initial turnover happens and the rent goes up, whatever it happens to go up before the guideline reapplies, in effect you're going to have 70% of rental units in this province decontrolled. So it's a slow death. I shouldn't say "slow"; five years is relatively quick, but it's death none the less. It's slow, slow death.
The minister has acknowledged that harassment is an issue. He's created the anti-harassment unit, which says right in his own legislation he is acknowledging that tenants will face harassment, that tenants will face landlords who will try to get them to move. And who wouldn't?
Let's think about what rent control is. Rent control, after all, I say to the government members, is a form of price regulation. Why do we have price regulation on rents? I'm not from Toronto either. I come from a smaller urban centre, but I say to you that this issue is most important to Toronto and the government ought to proceed carefully in this urban core. I grew up across the river from a city that went down a huge decline in 30 years, and it happened very quickly. I don't want to see that happen to this city. It's fashionable among some to bash Toronto, but I think we should be paying very close attention because in my view in this province, as goes Toronto, so go the rest of us.
But back to the issue. You decontrol rent, you decontrol price. We regulate the price of water, we regulate the price of natural gas and we regulate the price of cable television, yet this government is suggesting we ought not to regulate the price of housing, that we ought not to treat housing, which can eat up to 40% or 50% of some people's income, maybe even higher in some instances, and inevitably it eats up a greater proportion of the income of those who are less -- that we shouldn't control it. Is there a difference between the other types of price regulation? Yes, there is; certainly, there is. They're monopoly situations; there's no question. But when you are a lone tenant against a landlord, particularly a large landlord, I would submit that it is a form of monopolistic pricing when there's no control, no regulation, especially in a market that is completely freed up.
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We've talked about the new tribunal and we welcome changes the government is contemplating to resolving disputes between landlords and tenants. We think it's a positive step forward. We don't think anybody benefits from a slow and cumbersome system. I was, however, quite amazed to learn that the resources the government is contemplating allocating to this new tribunal will create an instantaneous backlog that will serve neither landlords nor tenants. You can talk the talk, but you're not walking the walk. That information does not come from tenants' rights groups; it comes from landlords.
The minister spoke about the property tax issue and we agree. The minister said correctly that in Bill 106 they've given municipalities the power to deal with that. But I would submit, Minister, that you've given that power at the very time you're cutting more than $1.6 billion in transfers to municipalities; you're doing it at the very time you propose to download housing issues to municipalities. I would submit that it will be just like junior kindergarten in that you haven't cut it yourself; you're forcing others to do your dirty work. That's the sad part about this. That is truly the sad part of this.
We will be voting against this bill. Moreover, we'll be presenting a series of amendments to this bill. I will say unequivocally that in two years' time, if we become the government, we will repeal Bill 96 and reintroduce meaningful rent control legislation. This game is a charade. It is not for real. What I find most interesting at this point in time is that even landlord groups share a number of concerns with us, serious concerns, and we will be addressing those throughout these hearings.
We think the government is not showing any vision in housing. Report after report says there's a critical shortage of affordable housing, particularly in Toronto. Even in their book Boom, Bust and Echo, the authors say in three to five years the crisis will worsen, and what do we have? We have a government that's suggesting the way to increase the supply of affordable housing is to decontrol the price. We say you're wrong, and not just us, a number of noted economists, and we'll be presenting their evidence at these hearings.
We suspect there will be an increase in the supply of high-end units. The government would argue there will be a trickle-down. We say trickle-down doesn't work. We saw the reports in the press yesterday. We know that in Ontario in the last six years there's been very little rental construction. The question is, will this promote it? We say no, it won't. We think the crisis will worsen and we will present evidence throughout the course of these hearings.
I'm going to turn it over to my colleagues for the remaining time. I just conclude by reinforcing that in two years' time we will repeal this bill and reintroduce meaningful rent control legislation. Throughout the course of these hearings we will present amendments that will clearly outline the position we will take on this issue when we become the government in two years' time.
Mr Sergio: Minister, you're quite right that we had some three weeks of public hearings, hundreds of deputations, and you're quite right that we need some changes. But after some eight or 10 months we have practically the same bill now, today, that you introduced last year. The changes you have proposed are totally meaningless. They do nothing to provide new, affordable rental units or to provide any protection for tenants. This is the demise of tenant protection and it's a licence to landlords to set rents, nothing more, nothing less. Rent control will be gone.
If you're serious in saying you're going to make some changes, then make a commitment today that once these hearings are over, based on what you hear, you will make those changes. Only then can we believe you that you mean what you say. Unless you do that, tenants certainly cannot take you seriously.
There is nothing in the bill that would let any builder, developer, go on the market and build new units. During the three weeks of hearings last year builders, and there are some here today -- are my three minutes up?
The Chair: You're getting close.
Mr Sergio: Then I'll pass it over to my colleague for the last three minutes, unfortunately.
The Chair: Mr Sergio, we're not out of time, it's just that we're running miles behind if we want to hear deputations this morning, but then again that's not your fault.
Mr Sergio: That's fine. I hope we'll have some other opportunities.
Mr Mike Colle (Oakwood): Minister, this is another one of your basic exercises in trying to fool people. In the last election you went door to door in your riding and said you would protect rent control. Now you're eliminating it. You're not fooling any tenants in this province. You're committing another fraud, and that's simply what this is. You're getting rid of rent control to please your big landlord friends. That's what you promised; that's what you're putting up for slaughter here. Affordable housing is being sacrificed to make your rich friends richer.
Look at your legacy, what you did when you got into office. You basically got rid of all funding for new non-profits. You had 300 affordable housing projects in the works; you got rid of 300 affordable housing projects. You talk about your commitment to maintenance in this bill; you've cut $100 million from the Ontario Housing Corp budget for maintenance and construction. You're abandoning people who are having a hard time making a living, the most vulnerable in this province. You're leaving it up to condo conversions.
I don't know if you remember the motorcycle gangs that went into apartments. That's what you're inviting back into apartments across this city, across this province. Demolition is the other thing you're inviting, demolishing existing units. We know you're trying to set up a straw man in saying that apartments are all run down. Most apartments are not run down. Most of them are in pretty good shape.
Sure, landlords need to be pushed a little, but you're not going to push your friends. You're not fooling anybody. They're going to get off scot-free. All you're doing is paying off your friends by getting rid of the government's important role in housing. Your government has said specifically that it's not the government's role to be in the housing business. You're getting out of it because you want your friends to have that business. That responsibility is now being left in no man's land because you have essentially sold out the three million tenants in this province to your rich friends, and who knows what's going to happen?
Our party is committed to repealing and bringing back rent controls in the next government. People have caught on to your act. You promise one thing -- you promised local government, you brought in the megacity; you promised them rent control, you brought in rent decontrol. This is a tenant rejection package, this is a landlord protection act, that's what it is. You're protecting your rich landlord friends.
Interruption.
The Chair: The four women in the front row, you've been warned. I've given I don't know how many warnings that there are no demonstrations, no comments, no applause. One, two, three four: You can't continue to do that or I'm going to have to ask you to leave.
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Mr Colle: The proof of it too is the elimination even of the rent registry, so tenants won't even know what the rent is on their units. You're eliminating that because you don't want anybody to know what the rents are. This is a systematic dismantling of a protective housing package, affordable housing that has built up over the last 20 years. You are tearing it apart. Why are you tearing it apart? As I said before, because you're not interested in that senior who is trying to make ends meet; you're not interested in that person on disability; you're not interested in that person's social housing who can't afford to live in the luxury apartments that are being built.
Since you've been minister, for the last two years, only 37 rental units have been built. They're not going to build any rental units, because they know all they're going to get any money on is building luxury units. You're leaving people to live in basements, you're leaving people to live in substandard conditions, which we got away from. Now you're putting people back into basements, you're putting people back basically on the streets. That will be the legacy of you as minister of housing destruction.
Ms Marilyn Churley (Riverdale): I'm just going to speak for a couple of minutes, because I have to go off to a press conference on the issue of the dismantling of pay equity in this province. Minister, during the election campaign -- this is déjà vu all over again -- you and several of your colleagues in the Toronto area promised categorically not to get rid of rent control and in fact that you would improve it. I honestly have trouble believing that you believe deep down inside that you have improved rent control, because as my colleague will elaborate, you are de-rent-controlling, you are getting rid of it. That's really obvious. People can't be fooled by the fine words you use about that. It's going to disappear.
I am genuinely very worried about low-income and middle-income and particularly fixed-income people in Ontario, in my riding, in East York, in other ridings. Yes, in Scarborough too. I am deeply concerned and worried. I'll tell you why. It's not only the decontrol of rent but also that the government has gotten out of affordable social housing. If you look at the studies that don't support your views on this, you will see that we really are heading towards a very serious housing crisis in this province. It's really important for you to look at the evidence. I know that Metro recently, just a couple of days ago, came out with a study, and there are deep concerns about lower-income people and people on fixed incomes.
I would say to you in all sincerity that I hope the members on the committee and you, in this second round of hearings, will listen better to the tenants, who are here because they have the same deep concerns we do. It is not rhetoric. It is not fearmongering, which has been proposed and suggested by you and other members of your government; it is serious, deep concern about what this is going to do.
I hope very much the committee will listen closely to what people have to say, not just the landlords but the tenants and -- I'd like to dump the bill, but I know you're not going to do that -- make some very huge changes and amendments to make this a little more balanced for tenants.
Mr Marchese: Minister, I have the pleasure of disagreeing with 99% of what you say. I leave 1% in case I might have missed something. This is a matter of déjà vu for me in particular, because I hear you with the same message I heard last time. I hear Mr Stewart saying, "We're being accused of not listening to people." He's right. He is not listening to people. We're accusing him, as all tenants are.
Some 70% of all the tenants' organizations and many lawyers working with tenants who came in front of those hearings we had last year said, "Leave rent control alone." Not rent review, which we had under the Liberal years, but rent control, "Leave it, we like it; if anything, improve that."
The only people who agreed with you were the landlords, the developers and some Tory people you had come in to tell you how good you guys are. Those are the only people who told you that you were doing a fine job.
I know you don't like to hear it, but those organizations that came to depute said your tenant protection package was not a package that protected tenants. They told you, "How dare you call it something that does nothing for us." It misleads the public, obviously, because the words "tenant protection package" do nothing for them. That's why people said this is for landlords. I agree with them; this is for landlords.
You and your colleagues have made it very clear that you've taken sides, as the NDP has taken sides. We've taken side, by and large, with tenants. There are 3.3 million people who are tenants. You said quite clearly that you've taken side with the landlords. The divide is quite clear.
There is no balance in this package. What you have done is to restore balance for the landlord, not restore balance for the tenant. That's what this package is all about. That's why we are seriously worried about what's going to happen to tenants.
What we know and what you know is that 72% of all tenants do not vote. That's why you're about to whack them over the head with this bill. You know that most of the tenants do not vote. My hope is we can change that so that we can teach you a lesson, so that tenants can teach you a lesson. Clearly, if you knew that 70% of the tenants did vote, you would not be doing this. You're banking on tenants falling asleep again as you do this to them. My hope is that it will change.
We know that 70% of all people move within a five-year period. Your own report, M. Lampert -- this is the report; I've looked at this very carefully -- said that 70% of the people move. You know, therefore, that this in effect kills rent control.
Let's say some people become aware of this and only 60% or 50% of the people move. You still effectively have a population that's going to move and that's going to be affected by the decontrolling of rents. That's the serious problem we have, where most people are going to face rent increases even though you don't admit to that.
The rest of the people who stay, by the way, are sitting ducks. You say if they stay, they're okay. They're not okay. I want to explain to you why, because you never talk about this. First of all, you have the guideline increases of 2.8%. If inflation goes up, that goes up too. You know that. At the moment landlords are allowed a 3% increase for capital repairs. You've added 1% extra on top of that. You don't talk about it very much, ever, but it's 4%; 2.8% plus 4%.
Hon Mr Leach: I said it this morning.
Mr Marchese: I'm repeating it, therefore, for you. You see, I might have missed something. That's 2.8% plus 4%; it's 6.8%. What else have you done for the sitting tenant who stays in that apartment? You've now allowed the property tax increases and the utility increases to be passed on. You don't talk about that, do you?
Hon Mr Leach: Or decreases.
Mr Marchese: What decreases?
Hon Mr Leach: If the property tax decreases, the tenants have the ability to go in and ask for a rent decrease.
Mr Marchese: But not all tenants are covered by that, as they were in the past. Only the people who make application for that would get a rent decrease, not everybody, which was automatically the case in the past. M. Leach, that is the case. All right, you can disagree but that's the case.
Hon Mr Leach: You're wrong.
Mr Marchese: As usual, you're right, you're always right.
We've got a problem here: 33% of the tenants make less than $22,000. They're about to be whacked by a rent increase through your legislation, where property tax increases plus the extra per cent could amount to anywhere from 8% to 9% to 10% rental increases. That is a lot for people --
Interjection.
The Chair: Mr Minister, you can have a debate, but you're going to have to do it through the Chair.
Mr Marchese: It's all right. I don't want to waste any time. People who are earning very little, as you know, many people who are acquiring new jobettes or the little McDonald's kinds of jobs, are not going to be earning a lot of money to pay the kinds of rents you are about to inflict on them. They're in trouble.
You also say you want competition and your fine friends are going to start building. Mr Lampert, your friend, the guy you hired, that economist, says there's a $3,000 gap. Do you know what it takes to build that $3,000 gap? A whole lot, including giving away land, which is part of the basis of that Metro report I read yesterday. They're dying for you to give them land for free so they can build like the good old days when you guys were in power in the 1960s and 1970s. If you gave them land or interest-free loans, of course they were happy to build, because it's a giveaway, but you're giving away our treasures for private profit.
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Why would we build if we have to give free land or interest-free loans to these people, your developer friends? Why would we do that? I'll tell you why we do that. We do that because you're taking sides with landlords against tenants. That's my fear. There's not going to be any building. We won't have a crisis in five years; we have a crisis now.
You've gotten out of the field and your private friends are just waiting for you to give them a whole lot in order for them to build. That's coming. I predict it's coming, because you will be faced with a crisis where you will have to give something away. I'm not sure what the Liberals are talking about when they talk about meaningful rent control versus the rent control we had in place.
You talk about the maintenance problems. There's a $10-billion problem, you said. What happened to those dollars? Under the good days of the Liberals we had rent review and rents went skyrocketing, incredible increases from 10% to 110%. Where did that money go? I'll tell you where it went. It didn't go for maintenance; they used the money to go buy other apartments and they built up a debt problem, the maintenance problem. So finally you come into power and say, "We've got to get rid of the NDP because these poor landlords are starving." They're not starving, Minister. They're making a good profit.
I urge you to call M. Barnicke, your friend, and ask him to expand the study beyond the 25 people they said they did. Expand it so we can see whether the profits are, as they say, 10% every year. I'd like to see such a study. They're making good bucks, otherwise they'd be out.
The Chair: A couple of minutes, Mr Marchese.
Mr Marchese: This is what the maintenance problem was all about. They're not spending the money they have made, the guideline increases, the increases of the past, on maintenance, because if they had, we would have had buildings that were in good standards.
You talk about this tribunal. You remember, Minister -- I don't know if your friends told you this -- that 95% of all cases are dealt with very well by the existing system. Only 5% of the cases were not being dealt with well. You now propose to change that system that by and large worked well and replace it with a tribunal. Who knows at what cost? Who knows at what physical cost to people who have to go through that change?
We know through the family support plan the kind of incompetence we've seen with that restructuring. Who knows what's going to happen with this? Who knows what's going to happen with your political appointments of these people on the tribunal? They're not going to be my friends; they're going to be your friends, friends of landlords. We're worried about those political appointments and we're worried about your new tribunal.
Your harassment stuff that's supposed to help tenants -- all the seniors who came in front of our committee said they're afraid to deal with the caretaker, because when they have a problem with mice or rats or plumbing, they're not going to take the landlord on if there is something that is being done unfairly by them, because they're afraid. It's emotionally exhausting to take them to the tribunal, given the length of time it takes, the emotional ordeal it takes. They're not going to take the landlord to that tribunal. So you're proud of saying, "The fines are much greater than before." It doesn't get rid of the harassment problem. Seniors are still going to be hurt by this problem.
I want to remind you that British Columbia did exactly what you're doing now. The result was higher increases and no building whatsoever. You want to reproduce what has failed. Why do you want to do that? Why would you reproduce a failed system in British Columbia and bring it to Ontario? I can't understand why you would do that and you've got to seriously consider the impact you have on all tenants, the low-income in particular; you've got to consider the impact on changing the measures you've introduced that affect care homes, where these people are seriously going to be thrown out even though there's a care arrangement between the person and the landlord. Your measures will force these caregivers to throw these people out. I hope you will reconsider all that.
The Chair: Mr Marchese, thank you. Mr Minister, thank you for coming and making a presentation to the committee this morning.
GOLDLIST DEVELOPMENT CORP
The Chair: Our first delegation this morning is Goldlist Development Corp, George and Max Goldlist. Gentlemen, thank you for coming. You have 20 minutes to make your presentation, although unfortunately we're running almost 10 minutes behind schedule. But I hope we'll all cooperate this morning.
Mr George Goldlist: Unfortunately, after listening to what was going on -- I didn't bring my own tenants -- I wish I had brought some of my tenants.
The Chair: The floor is yours, Mr Goldlist. Could you identify which of you is which?
Mr Goldlist: I'm George and this is my brother Max.
I think some of the committee members here are aware of where I come from, but just a quick history: We started in the construction business in 1952. That was 45 years ago. We got heavily into rental housing in 1958. We're probably the last ones who built rental accommodation.
We have no problem with our tenants. We've always treated our tenants right. We have never had a turnover in the numbers they're throwing out there. We own more than 5,000 units and we manage probably about 7,500 or 8,000 units. We don't have problems with tenants. We treat them fairly. They're our customers and we look after them. We think it's the government, starting off with Bill Davis and following up with the Liberals and obviously following up with my friends here, the NDP. They kept adding on more paperwork.
I graduated as an accountant. I like the construction business. I'm a brick and mortar man. I like to see. We're out of the business. We've got more consultants working, more guys trying to protect tenants. If they're trying to protect tenants, I want to know what their objective is, because if I give you some numbers on realty taxes, they're sickening. Every time I hear how the tenants have been taken by their friends and the amount of money they pay extra because their friends have the landlord as the dragon -- they keep on shooting at the dragon. Unfortunately, the tenants get caught in the crossfire.
There is no problem with landlords and tenants. On the basis of our buildings -- I was going to say 95%; I'm going to say 98% -- we have had an excellent relationship with the tenants. They love our types of buildings and we give them good value. But what has happened, first with Bill 4, which our friend is very familiar with? We had a building, we were ready to spend $4 million to $4.5 million to renovate that building, the same as we did the others in that development. They brought in Bill 4 and our financing was cut off.
I want you to know the tenants are a lot more intelligent than you give them credit for. The buildings where the rents were a little higher were full; the ones that were not up to our standards we had trouble renting. They didn't mind paying 5% or 6% more because they were getting value. You took that power away from us. I resent it and I resent a lot of things being said about landlords being greedy. We produce; we hire thousands of people. The day Bill 4 came through, we let go 40 people from our staff, and that was a nightmare for us, because you know we hire people who work. They're not minimum wages; they're wages in the construction industry.
I wanted to give you our history. We've been in this business a long time. If anybody tells you, "Do not change the act. It's not broken; don't fix it," they must come from Mars. If you go out in the city, in the greater Toronto area, you will not see one crane building rental. I'd be very surprised. I love rentals. We did very well by rentals, the tenants did well by us, until we got the politicians involved. That's when things started going downhill.
We are looking forward to building more rentals. We love it; the tenants, my friends -- I live in a rental building, in a Goldlist building. I enjoy going up and down the elevator. They like to get the best rent possible, but are they also fair, a lot fairer than some of you politicians are. The tenants know they get value. They'll pay for it and they're happy. They always want less, but that's human nature. We feel that the existing rent control has stopped us from considering building anything, no question at all. It's not even a question of gap, it's an emotional thing. We don't think the people who come here with big piles of paper know anything about rental accommodation like we do, what I was brought up into. My father was in it. I was in it.
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I know that people come here -- at the last hearing three people came, and each one brought a pile of paper like this and they took turns reading. I said, "I wonder if they know anything about rental accommodations, but they know how to produce paper." But paper is not the place where people want to live. People want to live in bricks and mortar that we can provide.
We're not that happy with the new bill. There's too much up and down. Quite honestly, I don't know if that's the right way to do it, but certainly what we have now is not working for the tenants or for the landlords.
I'm going to give you some comparisons of realty taxes. I think the friends of the tenants should stand up and be counted and not tell me stories: "Well, the homeowner will have to pay, the senior citizen." But there are also senior citizens in apartment buildings who are being screwed by their friends. Like the saying goes, "With friends like that, we don't need any enemies." Yes, there are some landlords who take advantage, but we're in it for the long term and we've been in it a long time.
My major problem is that you've got too many people mixing in who don't know anything about rental accommodation, and we cannot build. I'll tell you right now, if you look out the window, not too far, there's a crane down the street at Wellesley. We've got the crane, but it's condos we're building.
I'm not going to knock the NDP completely. There must be somebody there who knows something. They went and made a joint venture with us as partners. We were doing a partnership deal when the NDP government was in force. So I've got to give you credit for that. You guys did see the light sometimes.
We're doing it, and by the way, we're going to do well, the province is going to do well and it's going to be a nice development.
Mr Marchese: God bless.
Mr Goldlist: Thank you very much.
The capital improvements we're going through -- let me tell you this BS I hear that rents are going to skyrocket. We had a case in my riding, East York. I live there and we have a lot of buildings. There was an NDP member there. He came to a meeting of the tenants before the last election. I did not invite him. I invited the Liberal and I invited the Conservative. Let me tell you why I didn't. I wrote him a letter, I think three letters, that we were very heavily involved in this riding, we also live in this riding, and it would be a pleasure for me to meet him to give him my opinion. He didn't have time for me. He was too busy. So I called this meeting before the election and invited John Parker, who's our member, and the Liberal candidate, and all of a sudden he showed up. I was in the audience and had tenants with me. The tenants were there. He said: "Well, the Conservatives are going to increase rents 25%. You're going to have to pay a 25% increase in rents." So then I got up and said: "I don't know where you get this information. If I increase by 25%, and my tenants here all know me, I'll have an empty building."
Do you know what an empty building means? Bankruptcy. We know one thing: If we don't watch our costs and don't keep the increases at a reasonable level, half of our tenants can afford to buy condos in the greater Toronto area, because with the interest rates now they can buy, and the other half might not be able to afford to pay the rent. We're not stupid. We know this business and we've got to watch our increases.
I have the view that yes, the new bill is an improvement, but the key is, can you get a committee of each party to work together with developers to bring new product out? The buildings are deteriorating. You know what's happening in Regent Park. There's no question. It doesn't matter who -- a building is like a living soul. It has to be looked after and looked after and looked after. If you don't, you've got a problem, and this province is facing a problem because nobody is building any rental accommodations.
In all fairness, the provincial government decided to get out of it. I don't want to know what the amount is, what the subsidy is, but I bet you it's close to $1 billion going in and subsidizing housing in this province now. Private industry could do it for half of that and still provide the same cost, the same services. This non-profit is a great thing but I don't know for whom. Not for the provincial taxpayer. He's been fleeced enough. He says, "Stop the music, I'm getting off."
If anybody thinks that with this new legislation we're going to increase the rent and we're going to harass any of our tenants, it's like saying every time we throw out a tenant, we're going to have a party. Well, it's not true. We want our tenants to stay. We know the cost when a tenant moves out and a new one moves in. The tenant who stays, who is happy, who pays his rent is our business. We're in business to make money, there's no question. If that's illegal, then maybe we're in the wrong province or the wrong country. But our tenants are satisfied. If we do that, they'll stay. They know the turnover is not that great.
We're a big landlord, that's quite true. I don't apologize for it. I love it. When I go up the street we've got tenants, and it's just a thrill. All these guys come with their big packages and tell you I'm so bad. Maybe I'm bad. My grandchildren love me; my tenants like me. I don't know, maybe I'm a bad guy. As a matter of fact my tenants, and I'll admit it, helped me educate my kids. It's a business I'm in. We provide a service.
You might be in shock, but when we first built apartment buildings we used to get a rebate for empty suites to encourage us to build; that down the road they'll be filled up and we'll start making money. That was a different climate. Now we've got tenants. I don't know who these tenants are, where they're screaming that the landlord is taking advantage of them. I don't look so mean and I am not mean. I even put a tie on, special, today for you guys. So I can say something about this.
Let me just come up with a few things about building new buildings. If we could get together, I have now sitting on my desk in my office my architect's plans for 250 suites, to build rentals. If we can get that gap down to earn 5% or 6% in the next three years, we would do it, but we need your help; not your help to yell that the landlords are screwing the tenants. It's their friends who are screwing the tenants.
Let me give you some numbers on realty taxes. The tenants don't even know that. The GST, and the minister brought that out, is still a shock to me. Why would I pay 7% on a rental building if I want to build it and I'm building condos and I pay 4.5%? That's our friends in Ottawa. I can't figure that out. They're the friends of the tenants. Why am I going to pay 7% -- it goes into my costs -- on GST? If I build a condo it's 4.5%.
Mr Marchese: Is that what you mean by friends of tenants?
The Chair: Mr Marchese, please.
Mr Goldlist: I mean everybody. I don't get personal. You know me. I'm a nice guy. Don't take advantage of me. I'm not a talker, I'm a builder. You know me. Bricks and mortar are my job. You know I hire lots of our friends. They stay with me 25, 35 years.
Mr Marchese: They're good workers.
Mr Goldlist: That's right. Excellent. Oh boy, I love them. Their biggest nightmare was Bill 4. We had to let go 40 people. It wasn't right. I don't sleep because I haven't got money in the bank; I didn't sleep because of people I know whom we had to lay off, and not hire people. That upset me.
There's a story. Let me tell you, this is a perfect example. Please take note of this. We built a condo in Thorncliffe Park. For a two-bedroom condo the realty tax for the year is $1,552, which is $130 a month. We've got a much older building up at 47 Thorncliffe, a two-bedroom, not as fine as this condo because we haven't got the appliances, we haven't got the laundry facilities -- the realty taxes in that building per suite are $2,907. That's $242 a month compared to $130. My blood pressure goes up every time I see that. I say, "Why should our tenants pay $242 a month compared to $130 for the people in a building we built later?" I don't understand it. You're the friends of the tenants. Tell me. Give me an answer.
What I would do, if the saving is a 50% reduction in the rent of a tenant, we'll put 50% in a fund so we can do capital improvements and we don't have to go for increases. You tell me why the discrepancy is there. If you have any questions, please take down my number. Do you realize that the tenants know --
The Chair: A couple of minutes, Mr Goldlist, please.
Mr Goldlist: We have certain ideas that we could build because we're in this building business. I've got people with me 25, 35 years, construction people. How do we build rentals, which I really enjoy? We're doing fine with condos. We're partners with the province. They've got a cheque, they'll be getting another cheque, that's great.
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The thing is, how do we sit down and resolve this problem so that we can build? If we can get a 6% or 6.5% return, we get into that business, because there are tax benefits, depreciation, so we would work. But if you're going to keep on hassling the landlords that we're bad guys, we're not going to get any production. People come in here with their big books and paper; I've never seen them build one unit. But there are so many consultants around. What are they doing? What are they producing to take the pressure off?
When we started building at first, a young couple who got married could come in, have a choice of an apartment. They could pay a reasonable rent. It was great. Some of those people stayed with me for 25, 35 years. Some who came got married, had a couple of kids, they bought a house. But the rent was acceptable, they could afford it. They can't afford the rent now because you fellows are not doing the job and because you're pointing the finger at the landlord in every way. The tenants say, "Hey, hey, that's it," but it's not true. I get my tenants out, "Don't criticize George Goldlist," and our friend knows that but he's not here.
The Chair: Thank you very much, Messrs Goldlist, for coming this morning.
Mr Goldlist: No questions, nothing?
Mr Sergio: We have no time.
Mr Goldlist: Why didn't you cut me off?
The Chair: Before I lose complete control of the meeting, Councillor Walker, from the city of Toronto.
Mr Colle: This bill won't allow you to build any more units the way it is right now.
The Chair: Mr Colle, we're on to our next delegation, please.
Mr Goldlist: Don't showboat, okay, Mike?
The Chair: That's like asking him not to breathe.
MICHAEL WALKER
The Chair: Good morning, Mr Walker. The floor is yours.
Mr Michael Walker: Can I start?
The Chair: Yes, thank you.
Mr Walker: Last year when I appeared before the committee looking at the province's proposals for rent control, I could not believe that the province was considering such a dramatic change with so little justification. This proposed legislation effectively strips away most of the existing protections for tenants. Now I cannot believe that I am here again and the province has not listened to anything the people have said to them.
I think it's disgraceful that the provincial government is rushing this legislation through without listening to the tenants of this province, who represent 3.2 million of its population. The province heard thousands of people approximately a year ago criticize the proposed law, both in terms of general intent as well as specifics. On the other hand, I can count on my fingers the number of groups that supported it, including Mr Goldlist. So why is the bill here today in essentially the same form as when it was first proposed?
I have always said that the existing rent control should be strengthened, not removed. The Rent Control Act is a wonderful foundation to build a better future for tenants. What the current system does not do and what this bill does not change is the fact that there is no incentive for landlords to maintain their buildings properly. I've always believed that every landlord should be required to keep a capital reserve fund of money for future repairs. For seven years now I have said that the only way to ensure that apartments are properly maintained is to have a portion of each tenant's monthly rent set aside as a capital reserve fund. The money must be deposited in a special bank account, registered to the building and not to the landlord, and it must be available for capital repairs to the apartment building and nothing else.
I don't believe, through my 15 years as a councillor, that allowing landlords to raise the rents higher will mean that they spend more money on upkeep, because they won't.
Minister Leach has said that this legislation will "give landlords greater incentive to maintain their buildings." But in fact the rental housing industry is already achieving rates of return of 10% each year on average. This suggests to me that property owners do have money for maintenance. However, there is no requirement in law that they put some of this money back into the buildings they own to improve their condition.
Bill 96 spells disaster for many tenants, and I must say I am even more certain of this than I was last year when the changes were first announced. By its very name, the bill tries to suggest that tenants will be "protected" by this legislation. Tenants who move are not protected at all, because landlords can charge whatever the market will bear on vacant units. Because 20% of tenants move every year, most of the market will be decontrolled within five years. We have had a depressed rental market in the recent past and there is no place for rents to go but up.
There will be very little real protection for tenants in older buildings where the owner sees an opportunity to convert to a condominium or to demolish the building entirely. Councillor Gardner and I could go through north Toronto and point out to you 50 smaller buildings that are waiting for speculators to demolish or to convert to condominiums.
Bill 96 will repeal the Rental Housing Protection Act, which has been a very effective tool for municipalities concerned over the loss of affordable rental housing. There are some protections for tenants but none that any smart developer couldn't find a way around, and you know it. Remember that when British Columbia abandoned rent control in the 1980s, the effect was devastating. In Vancouver, 8% of rental housing was converted to condominiums and 7% of rental housing was demolished. The most desirable neighbourhoods and those close to downtown had rent increases ranging from 11.6% to 28.7% in one year.
The government may try to counter these facts by suggesting that the rental industry will start building again when existing regulations are removed. But this did not happen in BC. Most of the new stock was high-end condominium buildings, and you know that's what will happen. Experts in the development industry in Toronto say the private sector simply can't afford to build affordable rental housing and make enough of a profit. Mr Goldlist told you that. He criticizes social housing, but he basically wants you, me and other taxpayers to subsidize him through rezonings and other creative solutions where he gets a lot of freebies. That's what he wants, and we don't even own the housing stock afterwards. He just makes his profit at our expense. Mr Duncan mentioned that last night in his speech, and it's true.
The myth that the province is trying to propagate is that sitting tenants will be protected somehow; that is, if you decide not to move, you won't get a large rent increase. You will be able to keep your apartment, if it isn't converted or demolished, and generally things won't change much at all. That is where the impact on tenants could actually be the most disastrous.
Under the new law, landlords will be allowed to apply for above-guideline increases of 4% for capital repairs as well as unlimited increases for higher utility costs and tax increases. As well as this, the combination of social service downloading and the move to current value property assessment -- market value assessment in disguise -- will spell disaster for thousands of tenants who stay put in their apartments.
The effect of downloading alone will increase property taxes on average by 10%. Current value assessment will generate another tax increase for properties in the best locations. If there is no cap on increases, then many rental buildings could see their taxes go up a lot. Because of the Tenant Protection Act, it is the tenants who will have to bear that cost. This will come as a big surprise to tenants who thought they were "protected."
It is time the government listened to the people. Over 60% of the residents in north Toronto and the city of Toronto and over one half of the residents Metropolitan Toronto are tenants, and there are 15 government members in that area. Thousands of them have denounced this proposed legislation because they are the ones with the most to lose if it is passed. Bill 96 spells disaster for them. Bill 96 spells disaster for a stable and viable city that works for people, and I urge this committee to recommend that this bill be scrapped and that you start over again with changes that will build on tenant legislation to truly protect tenants; that is, build on the Rent Control Act and the Rental Housing Protection Act and the Landlord and Tenant Act, to name three. Thank you.
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Mr Wettlaufer: Mr Walker, thank you for appearing before the committee again this year. I want to ask you where you get your figures of the rental housing industry already achieving rates of return of 10% each year on average.
Mr Walker: It was a quote from an article last year in the Toronto Globe and Mail. I had it in my earlier speech, which you have a copy of.
Mr Wettlaufer: Was it by chance the Russell report?
Mr Walker: Yes.
Mr Wettlaufer: We've already heard this morning that the authors of the Russell report have suggested that it was totally improper to be quoting their report as a justification for how much the rate of return actually is. Maybe you can tell me how many apartment units are in the city of Toronto.
Mr Walker: There are over 170,000.
Mr Wettlaufer: Do you think that a number of 25 buildings would be an appropriate figure to use as a sample on the rate of return?
Mr Walker: To be perfectly honest, yes, I do, because when we do a poll determining the popularity of a government or at a point in time the popularity of parties running for election, a poll of 1,000 across 30 million people is accurate 19 out of 20 times within two percentage points.
Mr Wettlaufer: Let me tell you that the authors of the Russell report suggest that it is not. They don't believe that theirs is an appropriate sample. I can tell you that the actual rate of return in the province is between 2% and 4%. If I wanted to invest my money, I certainly wouldn't invest it in an apartment building where there's a risk at 2% to 4%, when I can to go the bank and get 2% to 4%. I can get more than 4% on a GIC. Why would I take a risk?
Mr Colle: I think we're here to talk about tenants, not about our GICs.
Councillor Walker, I want to commend you. I know as a lifelong Conservative, you have fought for tenants' rights --
Interjections.
Mr Walker: A red Tory. A little different from these guys, eh?
Mr Colle: If I may continue, you have been an advocate as a councillor for tenants' rights, whether it be the NDP government, the Liberal government or the Conservative government. You have a proven track record and your residents -- I've been at a couple of your meetings up in north Toronto -- certainly recognize that. Are any of the tenants' associations or tenants you have talked to in support of Mr Leach's landlord protection act?
Mr Walker: No, not even the committee established by Bill Saunderson, the MPP, through his riding association. They came out against the legislation unanimously.
Mr Colle: So there are no tenants who seem to support this in any way, shape or form?
Mr Walker: You might be able to dredge up one, but I don't think -- the answer is no.
Mr Colle: The other thing is, I know you mentioned the fear of speculation and the conversion and the demolition, especially in areas that are in high demand in your area of north Toronto. Could you expand on that a bit, what this bill might introduce in terms of the speculative aspect? Not too many have touched upon that.
Mr Walker: The present Rent Control Act and the Rental Housing Protection Act eliminated speculators. In the early 1990s the speculators disappeared and things have settled down. What will happen if you remove this legislation is we'll get back into the speculation. The speculators will see rental housing as a speculative commodity and they will spot the developments that they can convert. They will go in and will get rid of the tenants and convert them to condominiums. They'll get rid of them through extensive renovations and use that to evict. One way or the other -- they'll buy them out, whatever -- they'll take that apartment building out of the affordable rental housing market.
I can take you and the members around here and show you the buildings they'll tear down. They're on a fairly big piece of land. They may only be three-storey walkups, 40 or 50 years old. It will be allowed only two times coverage and the developer will go in and try and get six. That's the only way Mr Goldlist would ever build anything.
So they'll be torn down and the rest will be like on Balliol; they'll do a luxury renovation route. It feeds speculation. You've got to take the speculators out of the market. They have to be told by government that rental housing is not a speculative commodity, period. The only way to do that is through legislation, and we have good legislation in place.
I agree it needs improvement; I've criticized you all. I've criticized the Liberals. My job is to represent the people who put me there, and for 60% of those people I have to do what I think is best and what they tell me is best for them. I think that you, Mr Colle and Mr Leach, are there for the same purpose. In a democracy, we are there to do what the people want us to do.
Mr Colle: It's just that this bill really is great for the speculators.
The Chair: Thank you, Mr Colle. Mr Marchese, please.
Mr Walker: This bill is the key formula for speculators.
Mr Marchese: I must admit I prefer red Tories to Reform Party types.
Mr Walker: How about Conservatives with conscience?
Mr Marchese: I prefer them too.
Ms Churley: I worked with him. He's not a red Tory.
Interjections.
Mr Stewart: Why don't you talk about the bill?
Mr Marchese: Absolutely. Let's get back to the bill. I'm ready, Mr Stewart. Mr Walker, he's very sensitive.
We have a big problem on our hands. You may have M. Leach this morning, the Minister of Municipal Affairs. He talked about déjà vu, and I see this as déjà vu too. Round 2, to listen to very much what we heard before. Nothing has changed except what they have put in for the landlords. They say they need balance; this is a balanced approach; this helps tenants, helps landlords. He also says, "This legislation will cut red tape, improve maintenance, help to encourage investment in new rental housing and give the taxpayer a workable system at a reasonable cost." Sometimes I wonder whether they're serious. I think, do they really mean it? Is it a game? If they mean it, it's worse, I think. What's your response to stuff like that?
Mr Walker: In my opinion, it won't do any of those things. Some 3.2 million residents in this province deserve $24 million to be spent on them to provide safe, secure and affordable rental housing. That's a finite statement I make and I make it from 15 years as a councillor in a downtown urban centre that has 60% tenants.
I've been through all three levels of government and the previous government under Bill Davis, we're proud, or I am, that we introduced I am the first rent legislation, tenant protection legislation, because there was a clear need for government intervention to ensure that there was stability and security.
Mr Marchese: You heard Mr Goldlist say there would be no rent increases --
The Chair: Mr Marchese, I believe we're out of time.
Mr Walker: There will be.
The Chair: Mr Marchese, please help me out here. Mr Walker, thank you very much for coming.
COALITION TO SAVE TENANTS' RIGHTS
The Chair: The final delegation this morning is Barb Hurd and Elinor Mahoney, who represent the Coalition to Save Tenants' Rights.
Ms Elinor Mahoney: Which two microphones should we take?
The Chair: You're doing fine right where you are, Ms Mahoney. Welcome, and perhaps you could start.
Ms Mahoney: Let me introduce us. We're two of the gang of four. My name is Elinor Mahoney. I'm a community legal worker at Parkdale Community Legal Services, and this is Barbara Hurd. She is chair of the Federation of Metro Tenants' Associations. The two of us are here today representing the Coalition to Save Tenants' Rights, which is a province-wide coalition.
I want to start off by saying that it's very heartening to hear the minister say this morning that he is willing to listen, because what we are probably going to do in our brief today is outline the major concerns and problems we have with the "tenant rejection act," as we prefer to call it. But we want to assure the minister that we are quite prepared to discuss with him and his staff improvements to the bill, whether they be minor or major. So we too are willing to listen and we too are willing to speak.
First of all, why would we want to fight against a bill whose name is the Tenant Protection Act? In a nutshell our answer would be because it removes protection. It doesn't add protection for tenants. We believe, contrary to the minister's position, that it threatens to cause grievous harm to tenants and the rental housing stock of Ontario. That's why we have decided to call it the "tenant rejection act," because through it, we believe the government is rejecting tenants in Ontario and catering to the interests of landlords, land speculators and developers.
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It's important for the minister and members of this committee to understand the enormity of what the Conservative government is proposing to do. It proposes to tear down the shelter of protection that took 30 years to construct. In doing so, it is violating principles of tenant protection acknowledged and endorsed in the past by all three political parties represented here.
I'm going to talk a little bit about these principles, which we refer to as the pillars of tenant protection, pillars supporting a roof that shelters us from homelessness. We believe that there are four pillars, quite appropriately, with a house. The pillars are affordability, quality, security of tenure and supply. The minister has talked a lot about supply today and we will address that briefly, but mainly we'll be focusing on the other three. All four of these pillars must be in place, otherwise the roof will cave in and tenants will be left out in the cold.
The first pillar, affordability: Unless tenants can afford to pay their rent, they have no access to shelter. The minister indicates that he wants to give tenants choice in housing, and we echo that, but there is no choice if you don't have the bucks to pay it. It doesn't matter whether it's a vacant unit that a landlord has jacked up the rent on or whether it's one of the new units the minister is convinced will be built. If you can't afford it, then you have no choice in housing.
We have news for you. Rent review and rent control were a response to rent gouging and the resultant political pressure from tenants. These landlords are still in business and they are ready for action, and we still have a very low vacancy rate in many of the places in Ontario; I realize not in all, but in many places we have a low vacancy rate.
The tenant rejection act will destroy the pillar of affordability because it allows unlimited rent increases whenever a rental unit becomes vacant. Every time that happens, you can talk about the stock of housing, but the stock of affordable rental housing will get smaller.
Mr Leach makes much of the fact that tenants who stay in their apartments will continue to be protected by rent controls, but here are some of the changes he's proposing and we think these are negative changes to the rent control system.
First of all, he's getting rid of the rent registry. Tenants will have only one year after proclamation to discover if their rent is illegal. After that, it's too bad for that tenant. And by the way, landlords have six years to go after a tenant for arrears of rent.
Now here's a situation. Let's say you live in your unit, you thought it was legal, you don't check with the rent registry. A year goes by or a couple of years go by, you're still paying an illegal rent, you run into difficulties. You lose your job, you go into arrears of rent. Your landlord can go after you for arrears of rent for a rent that was illegal in the first place, and that's the balanced and fair legislation we are dealing with here today.
Another issue: While landlords may go to rent review when the cost of utilities goes up, tenants may no longer apply for a decrease when the costs go down. Again, there's a level playing field that I see is missing in the bill that Mr Leach refers to in his comments.
The third point: The bill permits landlords and tenants to agree to a rent increase 4% above the guideline without any review by a rent tribunal. Now this would happen if the landlord or tenant apparently want to have renovations or extra services added to the unit, but the opportunity for pressure and coercion is boundless. This provision in and of itself essentially weakens the whole principle of rent control or rent review, a single guideline increase above which government approval must be obtained.
We urge you, Mr Leach, to take that away or at least change it so that as under the current scheme, if a landlord and tenant are amicable and agree to changes, it would be subject to review so the number crunchers can see if the increase is fair.
The fourth point I will make is that landlords who do capital work on their buildings can raise the rent 4% above the guideline. That's up 1% from the 3% cap. I'll go further than Mr Marchese did when he discussed this. These annual increases are no longer limited to a three-year phase-in. They can go on forever, depending on the costs of the repair, and the costs will not be taken out of the rent when the repairs are paid for. So those are just some of the changes that we're concerned about, that we believe will destroy the pillar of affordability.
Ms Barbara Hurd: I want to talk about the next pillar of tenant protection, which is the quality of housing. Tenants cannot be said to be adequately housed if their home is substandard or unsafe. The tenant rejection act takes away many of the tools necessary to ensure rental housing stock is properly maintained.
Under the current law, landlords who are in violation of municipal work orders are not allowed to raise their rents until they fix up their buildings. These orders prohibiting rent increase, also known as OPRIs, are a highly effective tool in obtaining compliance with property standards bylaws across the province.
Tenants like OPRIs because OPRIs are automatic and do not require tenant initiative. Instead of losing a day's pay and flooding the courts with disrepair applications, tenants can wait for the freeze on rent increases to come into effect. Unfortunately, this government has planned to abolish OPRIs, even though OPRIs work and the government professes the desire to maintain the quality of Ontario's rental housing stock.
Under current law, if tenants apply to rent control for a rent decrease due to disrepair, the rent officer will ascertain if other tenants are affected by the disrepair and add them as parties to the application where it is appropriate. This means that a landlord who does not maintain his building may face an across-board rent decrease, even though only a few tenants have acted to enforce their rights. Knowing this, most landlords move swiftly to make the necessary repairs and preserve their rents. This is another very useful tool to maintain rental housing.
The tenant rejection act removes this provision. Under the new law, only those tenants who apply for a rent reduction will benefit. Most tenants are fearful to take action against their landlord and few understand how to deal with legal matters. So the effectiveness of tenants' disrepair applications is diminished.
This government claims to care about maintaining and improving the quality of Ontario's rental stock, yet is removing two useful ways to meet that goal. Additionally, the government has failed to establish a minimum maintenance standard for the province. It has only established a standard for areas with no property standards bylaws.
This isn't good enough. A single minimum standard should be established with municipalities given the option to adopt even higher standards. Similarly, the provincial government should ensure that all tenants in Ontario are protected from losing vital services instead of relying on each municipality to pass a vital services bylaw. These are initiatives the government must take to preserve the pillar of quality. Otherwise, this pillar and much of Ontario's rental housing stock will crumble away.
The third pillar of tenant protection is security of tenure. Tenants must have a right to stay in their homes unless they are given good cause for eviction. They should not have to risk their homes in order to secure their rights and they should not be evicted without an opportunity to have their defence heard. The tenant rejection act takes away much of the security currently offered by the Landlord and Tenant Act and the Rental Housing Protection Act. Tenants can lose their homes if their landlord wishes to convert to non-residential use or demolish the building. No longer is municipal approval required.
Landlords no longer are required to give particulars on notices of termination. If tenants don't know what they are accused of, it is difficult to defend themselves. The tenant rejection act requires tenants to file their disputes in writing and gives them insufficient time to do so. People who cannot read and write and people whose first language is not English are especially prejudiced by this new requirement, but all tenants are affected by the insufficient time given to file a dispute.
Seniors and people with disabilities who live in care homes face a new threat to their security of tenure. Their landlord may apply to have them evicted and victimized, which the government calls "transferred," if their health changes and the landlord doesn't want to rent to them any longer. CSTR believes this new ground of eviction violates both the Ontario Human Rights Code and the Canadian Charter of Rights and Freedoms. Essentially it says that people who live in care homes should have fewer rights than people with the same medical condition who live in other accommodation. This is discrimination at its most odious and it leaves Ontario's most vulnerable tenants out on a limb.
But those who live in other rental accommodation should not be too smug. Landlords now have a financial incentive to get rid of seniors and others living in those rent-controlled apartments, even if the buildings have been well-maintained and are located in a desirable area. Once the long-term tenants are gone, the rents can be jacked up as high as the market will bear.
The government says we shouldn't worry because they have introduced stiff anti-harassment measures, but this misses the point. The reason anti-harassment measures are needed is precisely because the government, through vacancy decontrol, has created such an incentive for harassment. Harassment takes many forms and not all are covered by this law. How would you feel if you were asked to move your furniture three feet away from the wall for a monthly inspection? Or if your landlord moved a group of partyers into the apartment next door and you were kept awake all night? Even if landlords harass in more obvious ways, there is no guarantee that these anti-harassment measures will be enforced. The ministry has only three enforcement officers for the province.
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Ms Mahoney: The fourth pillar of tenant protection is the adequate supply of housing. If no rental housing is available the other rights are empty. This government says this bill will encourage rental housing construction and believes that getting rid of rent controls will help in this process. But developers and other housing experts say this is not the answer, and they said so last summer in front of the committee hearings. I would refer the minister back to some of the comments there.
Common sense also will tell you that allowing landlords of existing housing -- and the minister referred to 80% of buildings having just a small number of units. Those landlords are not developers and construction experts. They're not going to go out and build more housing; they're just going to reap the benefits of the abolition of rent controls.
If the government really wants more housing on the market it should work with those non-profit developers who have a proven track record of housing starts, especially if you want affordable rental housing. Instead, the government has cancelled many of the housing programs and is now moving to repeal the Rental Housing Protection Act.
We are glad the minister has provided some security of tenure for condo residents who are now tenants. We think that's good, but we'd like to see other protections built in for tenants in housing. We believe essentially you should have security of tenure unless you've done something wrong or you can't afford the place. We are worried there's going to be not only a net decrease in affordable rental accommodation but also in rental accommodation of any type.
As bulldozers remove this last pillar of tenant protection, we remind the committee that even if tenant protection were saved, it would mean very little to Ontario tenants if it weren't accessible to them. Just as the four pillars support the shelter of tenant protection, so the door of equal right to housing ensures that all have access.
We're concerned about a provision in the tenant rejection act that would amend the Ontario Human Rights Code to potentially allow landlords to perform income checks on tenants so that if tenants didn't have a certain level of income, perhaps that landlord would be able to reject them. Currently there is a case in front of the Ontario Human Rights Commission's board of inquiry on this very point, and we believe this amendment is pre-empting the results of that board of inquiry. Not surprisingly, the chief commissioner, Keith Norton, has expressed concerns about this and we share those concerns.
Who benefits from Bill 96? The list is quite small. Slum landlords who have been prevented from raising rents until they fix up their buildings will benefit. Once this becomes law they can issue notices of rent increase and catch up, and all the rent freezes will be cancelled. Bigoted landlords who don't want to rent to people of colour or families with children or welfare recipients will be able to use vacancy decontrols and income checks to get around the Human Rights Code. When they negotiate the rent with someone whose colour they don't like, they will be able to just negotiate at a higher rent than they would if it was someone they did like. We don't see any public benefit from this provision.
Who loses with the tenant rejection act? The list is long and here are some of the victims. Battered women and their families are left out in the cold. Women already have a very difficult choice to make when they leave their abuser and take their families and go off to a life of poverty and uncertainty and a life where their family structure has been destroyed. They often go to shelters, and then they have to find a place to live and start their lives again. Because of vacancy decontrols they will be entering a housing market not freely, where they can negotiate from a position of strength, but from a position of petition, where they are just begging to get accommodation. These people's lives will be made much worse because of the Tenant Protection Act.
The Chair: Ms Mahoney, you've got about a minute.
Ms Mahoney: I believe we have until noon.
The Chair: Yes, you do.
Ms Mahoney: I see three minutes on the clock.
The Chair: You're on page 11 and I notice you've got 16 pages.
Ms Mahoney: Do you want to mention any of the others or do you want to go straight to the summary?
Ms Hurd: Young people are especially vulnerable to the effects of vacancy decontrol. They'll be hit with high rents because they're coming newly into the market. They have problems getting work. If they try to become students and participate in higher learning, they've also been hit with higher tuition fees and also a poor job market. Every apartment they look at will be potentially decontrolled.
The other victims you will find affected by this are refugees arriving. They're looking for new accommodation. They are also often on limited incomes. Anybody who is a visible minority, people on social assistance, may find themselves staring at rents that are completely outside their budgets.
We will go straight to the summary.
Ms Mahoney: Any person or family of limited means, essentially, who must rent to keep a roof over their head will suffer from almost everything in this legislation.
The body of law built up over the past 25 years is being systematically unravelled by the large and small changes in this bill, and we're very concerned about that. These laws were enacted in the past because of the evidence that tenants needed government protection, and that point has to be emphasized. It's because of the past track record of many landlords in the province that we needed tenant protection in the first place. That's why tenant laws have always been written as remedial legislation, not to offer incentives to developers but to protect tenants, until now.
Ms Hurd: There is no up side to this legislation. The landlord and development lobbies and housing experts all agree that this will not create new housing; it will just create more expensive housing. While landlords decry this legislation as pro-tenant, theirs are crocodile tears and not to be trusted.
This government has betrayed the tenants of Ontario. It did not promise to do this in the election. In fact many candidates promised that rent controls would be maintained. I guess they'll have to swallow their words and fall lockstep into the Mike Harris war against the poor.
We told you during the hearings last year of our fears if this law was enacted, and so did dozens of other tenant groups and social organizations across Ontario. You didn't listen to us, the people who will be affected by this law, many of whose lives will be ruined by the loss of our homes and by the draining of resources that should be devoted to proper food, clothing, education and community life.
While we're still prepared to listen, to discuss positive proposals and to make positive proposals, and we're willing to work with the government, we're very concerned and unhappy. We're going to be having press events coming up in the future that will demonstrate some of the needs for increased tenant protection, not less.
Minister, I think your government listened to wealthy landlords and developers who seek to get wealthier at our expense. You're the agent of this well-heeled special-interest group, against the need for housing security, safety and affordability of Ontario's 3.3 million tenants. It is a shame and indeed should be considered a crime that this government believes in and enacts laws to reward private greed over the public good.
The Chair: Thank you very much, Ms Mahoney and Ms Hurd. There is no time for questions.
Mr Marchese: Mr Chair, I really believe this is an important bill that affects 3.3 million people and we really should be in room 151, where these proceedings are televised, including areas of public health, where this morning we were boiling in here. That room is a little more air-conditioned. For both reasons, we should be in that room. Is there any reason why we're not there?
The Chair: I'll undertake to review that with the Clerk's office. This meeting is recessed until 3:30.
The committee recessed from 1158 to 1531.
The Chair: We're continuing with Bill 96. We're into delegations this afternoon.
I wish to advise the members of the committee that as a result of the request made by Mr Marchese this morning, room 151 will be available as of next Thursday. We will be sitting in 151 next Thursday.
ONTARIO ADVOCACY COALITION
The Chair: The first delegation this afternoon is the Ontario Advocacy Coalition. I have one name, Patti Bregman. Welcome to the committee. Perhaps you could identify yourself and commence your presentation.
Ms Patti Bregman: My name is Patti Bregman. I'm a lawyer at ARCH and I'm acting here as counsel for the Ontario Advocacy Coalition.
Ms Linda Davis-Bonar: My name is Linda Davis-Bonar. I am a member of the Ontario Advocacy Coalition. I also am a person with a disability and a person who is greatly affected by these issues.
Ms Bregman: We appreciate the opportunity to appear this afternoon. We think there are provisions in this legislation which perhaps unintentionally will really destroy the lives of some people with disabilities by making them more vulnerable than they already are. We don't think you did this intentionally, and we are using this afternoon as an opportunity to talk to you primarily about the care home provisions so we can help you to understand why we're so concerned about these provisions and ask you to meet with us to look at how they can be changed, if at all.
Given the time limitations, we won't deal with the broader issues, but I want to point out that with respect to rent control and the elimination of rent control for new housing, this has the potential to have a very significant and disproportionate impact on people with disabilities. There is such a short supply of residential housing that's accessible right now that most people with disabilities look to new housing to move into. This means they have fewer opportunities to move into housing that already exists and therefore in future are likely to have fewer opportunities to have truly affordable and rent-controlled housing.
Having said that, we want to talk about three major parts of the bill. Although I'm a lawyer, I'm not going to stress the legality. What we want to do is be somewhat practical and take you through why we think the provisions as they are drafted aren't going to work. We'll talk about the right of the landlord to evict if service needs exceed or are less than those provided, the tribunal and care home issues, and remedies available for harassment, coercion and eviction.
We also want to give you the human side, and we thought we'd start by giving you two brief examples of what happened in the past and why we ended up with legislation to protect rights.
I'm going to start, with the request of the family, to tell you about a client of ours who unfortunately passed away. This family wanted to be here and couldn't today. He's exactly the person who will be affected. He had severe cerebral palsy. He was living in a supportive housing environment outside Toronto and had lived there for 22 years. He was 35, interacting with the community. He required speech augmentation. He couldn't speak, so he needed people around him who knew how to speak.
He became ill and had to go to the hospital, and all of a sudden they decided he couldn't come back. What really seemed to precipitate it was that the family was expressing some concerns over things that had happened at this care home. After four months, they contacted us to try and get him back in and we started negotiating.
In the meantime, he was into Riverdale, an institutional setting where there is nobody around him who can communicate with him. There is constant changing of nurses, constant changing of staff. They don't understand how to communicate with Bliss boards. The attendants who took care of him at this other place were forbidden from coming to visit him by the staff and by the director. They sent their doctor in to examine him without consent.
Riverdale did their own evaluation. They said: "He's fine; he can go back. His level of need has not changed." They evaluated him according to the standards of the care home. The care home said: "No, we won't take him back. That's the end of it." So after 22 years they basically sentenced this person to living in an environment where he could not communicate, and he died. He died of aspiration. Who knows what would have happened if he could have gone home? That's what these care home provisions are going to allow you to do.
I think for the sake of people like this and for their families -- because the end result of this story is that the families of the other people living there who are concerned about their care are now afraid to say anything because they saw what happened when families started raising their voices. We think this is entirely possible and all too often will happen.
I want Linda just to talk a bit about her own situation and explain to you a little bit how it will affect her and her friends.
Ms Davis-Bonar: I'm new to the disabled community. I never classified myself as disabled until I was labelled maybe six years ago. The reason I came to be in this particular situation is because I was under a great deal of stress and pressure after having another child and my marriage being affected. Everything started to show itself and I finally had the diagnosis of multiple sclerosis, and after that with my last son having a diagnosis of cerebral palsy as well. This escalated, with the marriage breaking down, and then I was assaulted by my husband. So I was forced to leave my home and find something that was accessible for myself and for my children.
What I found was actually very good and I would like to keep it. We're trying to stop the government from trying to overthrow right now the rent-geared-to-income controlled kind of apartment that we are in. I will be greatly affected if you take this away from us.
The other thing is that with my kind of disease, I could possibly get worse, and because of that, what's going to happen to my children? And where am I going to go? Will I be institutionalized and will my children have to go into children's aid, things like that, or in to some kind of care facility? Then once I'm taken out of my apartment, how will I get back into the system? It's something we don't think we're going to be affected by until we are, and then all of a sudden it's happening to me as well. It's real life, unfortunately, and I really wish I weren't here speaking like this.
I haven't too much more to say except that I know many others who are in my situation, who are living in places as well, and they are very much dependent upon rent control. If we are not given that privilege and that right, it's going to be a much more costly factor, both financially and emotionally. It's going to be the devastation of a lot of us. Back to you, Patti.
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Ms Bregman: I want to talk a little bit about this right to evict based on care needs, and I know there are some providers who said you have to have this. After the Residents' Rights Act passed two years ago, I did a lot of speaking around the province to a number of provider groups and disability groups. What was really clear, and it came not just from me but from the providers, was that the good providers didn't need this. Yes, there are times when there are care needs that can't be met, but the reality is that good providers found ways around that. They negotiated, they mediated, we assisted in some; it worked.
Our concern is that by suddenly changing once again and moving from a system where care and housing are recognized as separate, we are again going to give the hammer to the bad landlords. I'm not worried about the good ones, because good landlords will tell you they won't use this, that they would find it offensive, that it goes against their philosophy. We worry about are landlords who aren't good ones. Why give them any more help? We already have enough problems in trying to deal with them.
When we moved to care homes being included it was because of a recognition that your home is your home. Because you have a disability, that doesn't make it any less necessary to live somewhere. The idea was aging in place and move ahead.
I want to take you through, though, the reality of what will happen. Even if you're not convinced that in theory it's not good, think about what it would be like if, let's say, Linda's landlord says: "Sorry, MS is degenerative. We can't provide your service any more." It may be true and it may not be true. We saw that was the excuse used a lot previously as a way of getting rid of difficult people.
What's the first thing? She'll need an expert assessment. The housing provider will need an expert assessment. The tribunal has no expertise; they'll need their own. Right there you're talking about $6,000 in experts alone. Often the tenant is the one who has to pay. You'll need legal counsel because tenants who are particularly vulnerable, and many will have speech disorders, can't represent themselves. We need legal aid. We need lawyers. That increases the cost.
What evidence can they consider? In many of these settings it's shared block funding. The ministry doesn't fund places by saying, "This person gets X; this person gets Y." They say, "This project serving 10 people gets this amount." This legislation lets them off the hook from having to operate efficiently because what they can do to get rid of people is say: "I'm going to give an extra amount to this person. I'll give this person 10 hours, this person three." That would mean, to adequately represent somebody at a tribunal, I would want to call the evidence as to what every other person in that place is receiving to see if in fact they're receiving the same amount. On the other hand, is it fair to jeopardize their services by saying that somehow they shouldn't be getting that? Again you've got a procedural problem of the tribunal not being able to deal with it.
What about the proposed alternative that was built in? Can the tenant be forced into that? Right now there's a three- to five-year waiting list for alternative supportive housing in the city of Toronto. That's not going to improve. The only alternative may be unregulated care homes, where abuse has occurred, and we're getting a lot of calls these days. Can the tenant be forced to take it, and is the option that you take it or you're out on the street? What options does the tribunal have?
If that's not the option, if there's nothing out there, can the tribunal order the government to provide support services if there are none in the community? Otherwise you've got a tribunal that says that yes, they need more care, but no, there's nowhere for them to go. Where does that get us?
We're setting up a tribunal to deal with issues that actually need to be dealt with in the long-term-care system. These are not issues of housing. These are issues of adequacy of funding, adequacy of services. You're going to end up having this parallel system which jeopardizes tenants. You're doing nothing that will protect the tenants.
What you're really doing is letting bad landlords off the hook. They're not going to come to you for more money, they're not going to come to people for more money, but basically you're not going to help either good landlords or tenants by doing this. If for no other reason alone, the logistics of how this tribunal can work -- it was pretty clear when I went through it that it can't work. It's an unworkable, untenable situation.
I want to conclude this part by talking about two other small sections where I think you can make some improvements, because I don't think you took care homes into account, and that's penalties and compensation. We're pleased that penalties will be increased for landlords who coerce and harass and that there will be compensation for tenants forced to move, but if you are a tenant with a disability, you can't move if there is no other alternative housing or if there is no alternative support service.
Our recommendation is that you need to take that into account and allow the tribunal to order the care provider either to provide the services by giving the funding directly to the tenant to purchase their own or to provide the services in whatever appropriate alternative setting is available. That's the only way this remedy will have any effect for people with disabilities who are living in care homes. I don't see any reason why the landlord shouldn't have to take that responsibility on if this is really intended to do that.
Finally, you need to make sure it's clear that the coercion and harassment relates to delivery of service as well as to housing. We are getting increasing phone calls about people who are left with urinals on their bed, who are left with no call buttons, who are left in washrooms as a way of punishment for asking for more. I wish I could say it's not real, and I wish I could say it's not out there, but it is; it has been documented. We need to ensure landlords can't use that type of coercion as another way of getting people to move.
The Chair: Thank you, Ms Bregman. I believe each caucus has about two minutes.
Mr Duncan: Thank you for your presentation and the manner in which it has been given. I take it that by not dealing with the types of amendments you've proposed, we're taking a step back from what Professor Lightman had recommended a couple of years ago and that the consequences are graver for people with special needs than they are for anyone else.
Ms Bregman: Let me give you an example. This is something that really shocked everybody. Those of you who were in the Legislature during the last government may remember we had a case in Windsor, exactly this issue. It was prior to the Residents' Rights Act. Too much care needed, because the person kept asking for things. We represented them and challenged the exemption of care homes under the Landlord and Tenant Act and were successful in getting an injunction. Then the residents' rights bill was brought in.
When that legislation came in, the landlord/care provider said: "Oh, we couldn't possibly operate that way. We're not going to provide the service any more." It was fine with everybody involved; there was another service provider. Lo and behold, when it came time to transfer it and the money, the service provider said, "No, we want it back." When the government said, "You can't have it back, because you acted irresponsibly. You didn't want it; we've contracted," they then turned around and refused to let the new provider in. We went back to court. The government came in and they passed an order in council taking this place over. It was the first time the government had ever done that.
Was that enough for this provider, a well-respected provider out of town? No. The sheriff had to be called to change the locks so that the care providers could go in, where emergency services were provided. This is real; this is documented.
That's exactly why the Residents' Rights Act was put into place. It made a difference. Tenants refused to meet with us publicly before that legislation was in place. They were afraid if they were seen with lawyers they'd be evicted. You're right.
Mr Marchese: Thank you for coming again. We see you often. We heard you and many others when we tried to save the Advocacy Commission. It didn't have much of an effect on this government. These people across the way don't like advocacy in general. They don't like advocates.
Mr Tom Froese (St Catharines-Brock): That's not true. That's not true at all.
Mr Marchese: So I'm afraid they might dismiss you as just being yet another interest group; I don't know.
Ms Bregman: I prefer to be optimistic.
Mr Marchese: I hope you are, and I hope you continue to be that way.
They've gotten rid of the funding for most of the advocates who deal with tenants, as you probably know. Then you hear my friends saying that what I'm saying is not true.
Mr Froese: Just be fair over there.
The Chair: Order.
Mr Marchese: Ms Bregman, I just wanted to leave you whatever time was remaining to add whatever comments you have that you want to make.
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Ms Bregman: What we're really asking for is an opportunity to go back to being part of the process. This is unworkable, regardless of whether you agree with it or not. We were not involved with the drafting. We were not consulted as they were developing this. We had one meeting after the previous set of hearings and we tried to explain what the issues are.
We have a provincial liaison group made up of providers and people with disabilities that advises the long-term care division. We need to sit down with long-term care, housing, service providers and tenants and look at what the real issue is.
I find it, to be honest, somewhat patronizing. I don't think this was the intention, but if you think about it, the argument we keep hearing is, "What about the person with Alzheimer's who doesn't know they should move to an institution?" That was the justification given. I can understand that. The problem I have is that, first, this goes way beyond that. Second, we have in place in this province a series of legislation, some passed by your government -- the Substitute Decisions Act, the Health Care Consent Act -- so that if somebody is incapable of making the decision, there is a legislative framework in place to deal with that. Most people with disabilities, however, aren't different from anybody else. They don't want to live in unsafe conditions. This legislation assumes that unless you push them out the door, they won't go. I don't think that's the case.
We find two things. One is that people say: "I really like living in the community. This is the service provider. It doesn't have enough money." They may not have enough money, but should that problem be put on the backs of the tenants? That's what's happening: Not enough money to provide service? You move. The other thing is simply that there isn't anywhere to go. Neither of those problems is going to be resolved by this. You'll find that evictions can't happen because there isn't the service out there, there's nowhere to go; or if they do happen, there may be some pretty dire consequences. I don't think any of us wants that. We need to think of ways to deal with it.
Mr Gilchrist: I appreciate your coming before us here this afternoon and adding this perspective. I must admit, as Mr Froese interjected, it becomes quite tiresome when members of the third party suggest they have a monopoly on compassion when members of our own caucus face challenges like this in their own families. I think he might reserve those comments to himself.
I'm troubled by your perspective on this -- I say this quite sincerely -- and perhaps you can help us with the wording, because as I read subsection 93(1), I get a very different sense of how strongly protected people in this situation are from any kind of frivolous attempt by a landlord to displace them. If I can just read it to you, I'll forget the preamble about the less care or greater care than the landlord can provide:
"(2) The tribunal may issue an order under clause (1)(b) only if it is satisfied that,
"(a) appropriate alternate accommodation is available for the tenant; and
"(b) the level of care that the landlord is able to provide when combined with the community-based services provided to the tenant in the care home cannot meet the tenant's care needs."
If there is no alternative housing and only if home care or the landlord's ability to care is inadequate where they are today would there be the ability, never mind the willingness, to move someone in this situation.
We all have to have faith, whether it's the Ontario Municipal Board or the new tribunal we set up here, that these will be honest, honourable, responsible people who will do what is before them. But the alternative is the suggestion that if you don't meet those tests, we actually leave people in situations where they can't be cared for.
If it's the wording, we have a number of weeks before this bill will come back to the Legislature, obviously when we break for the summer, and I would ask you to send in a proposal to us of how you think the wording could be changed to make sure the kind of contingency that you suggest as a worst-case scenario can be prevented absolutely.
Ms Bregman: It's not just the wording; I agree with you. That's why I said that I don't think this was intentional, I don't think people went out in bad faith and wanted it. But I think the reality of the situation is, what do you do when there isn't alternative housing and services aren't provided? Then you're put in the position where things aren't any different.
Our concern is that given that the tribunal cannot rectify the fundamental problem -- the real problem is services. In other words, this is only going to happen when the landlord doesn't have the money to provide the service and there's no funding in the community for the service. Whether or not the person is evicted isn't going to change the availability of the money and the service, but what it does is that unfortunately there is a small but vociferous number of bad landlords that will use this and hang it over the heads of people and make them afraid to complain about bad situations.
This is such a tenuous type of thing. As I said, the evidentiary issues are what concern me. How do you prove that the services are not adequate? In the cases we see, it's almost impossible to think of how you're going to get that kind of evidence.
I'd be glad to talk to the ministry and to long-term care. I think it would be useful to sit down, because they have legislation dealing with this as well, in terms of rights to cut services. I think we need a comprehensive solution that really looks at the fundamental issue, which is ensuring that people have the services, that we make them available and that people are receiving what they need.
The Chair: Thank you, Ms Bregman. Unfortunately we've run out of time. We appreciate both you and Ms Davis-Bonar coming and making your presentation this afternoon.
SHEILA JACOBSON
The Chair: The next delegation, which is 35 Walmer Road Tenants Association, has been cancelled and it's being replaced by Sheila Jacobson. Welcome to the committee.
Mrs Sheila Jacobson: I understand I have 15 minutes to speak. I'm going to put on a timer. Is that necessary?
The Chair: Sure, you put on a timer. I need all the help I can get.
Mrs Jacobson: My name is Sheila Jacobson. Good afternoon, Mr Chair, members of the committee and staff. I'm here to speak today about maximum rent. The present legislation as well as the old Rent Control Act were very much one-sided in that they gave a window of opportunity to bad landlords to economically evict tenants they didn't want, even though the tenant may not have done anything wrong. There is a very live case in my personal life.
My husband and I live in Brampton, in what is supposed to be a luxury apartment building. My husband was transferred 14 years ago; we're ex-Montrealers. At that time in Ontario there was a serious housing crisis, so we took whatever we could get. We found this apartment building that was in the middle of construction by Bramalea Ltd, which then continued to manage that building. They were a very ethical and fair management company.
Unfortunately, upon their demise, or just before that, another management company was brought in -- very unethical, almost bordering on the unconscionable. I happen to be an accountant, as is my husband. We are a childless couple. We're in our mid-40s. We're a quiet, law-abiding couple. We don't have parties, we pay our rent on time, but we also happen to know the law, not only because we're accountants and we try to stay on top of various legislation that affects our personal lives, but I worked in the property management industry as an accountant. I was in and out of it for 14 years, so I remember back in the 1980s, when the Liberal government brought in the concept of maximum rent, I spent hundred-hour weeks putting together market rent versus maximum rent and all the numerical juggling we had to do with all our portfolios.
I'm no longer in that industry, but I still have friends who are, and I've seen a trend. What has happened is that the ethical property management companies have gone out of the marketplace. Cadillac Fairview was the first one; Bramalea Ltd was next. A number of very good, reputable companies are gone. What has come in their place are what we in the industry traditionally considered as the lower rung. The bottom layer of the industry has now managed to penetrate better properties, like the one we're living in.
This particular property management company sends out illegal memos trying to collect $10 for things like filters, late payment of rent and on and on. We don't pay our rent late; we make sure our rent is paid on the first of the month. That's just the way we budget our life. But there are people who are less fortunate than us, who perhaps don't have the same financial security we have, who sometimes are late. What this management company does is demand the $10 in cash only, does not give receipts and the money just disappears; there's no record of it.
I pointed out the illegality of this to the management company. Now they are out to get me out. They can't find anything I've done wrong. As I said, we're a quiet, intellectual couple. We don't have wild parties. We're childless; they can't even accuse us of having kids who go around vandalizing the property or whatever. But I am a problem to this management company: I know the law. I will not let them cheat me.
The only window of opportunity they have is to suddenly bump my rent up to the maximum rent allowed. We are paying $984 a month for a small one-bedroom apartment out in Brampton. I know by Ontario standards one would ask, "Why in God's name would this young couple want to spend that much money on a one-bedroom?" But you have to keep in mind we're ex-Montrealers; we're not sure we're even going to remain in Ontario beyond perhaps another 10 years. Actually, we expected my husband to be transferred to the US, but we're still here and we like that lifestyle.
I don't want to be in a condo; I don't want to have meetings and condo boards and I don't want to pay $500 in condo maintenance fees and so on. I like the lock-and-go lifestyle where somebody else just takes care of everything for me. That's just the way we like it; and there are numerous other families in our building.
The concept of maximum rent and how this opens the door to unfair economic eviction: We're paying $984 a month for the one-bedroom apartment. The maximum rent for my apartment is close to $1,500. The landlord has the right to ask us for the $1,500. I don't have any objection to that. I believe in capitalism. I apologize to those who perhaps do not share that philosophy; I believe people have a right to make a return on their investment. I will support any group that says people deserve to get a return on their hard work and investment.
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The legislation should be balanced in that, fine, the landlord can bump it up to $1,500 and push me out -- because I will refuse to pay $1,500 for an apartment when right now the landlord is unable to get even $800 for a one-bedroom in that building. There's a recording in the management office saying, "A one-bedroom apartment is $800." I'm paying $984. My rent has gone up $84 a month just in the last two years, and we haven't complained because so far we've been able to stretch and make do and manage to pay this.
What they're hoping to do is bump my rent up to the $1,500 and push me out. The new legislation allows the landlord, once the long-term tenant is out, to then suddenly gauge that rent to market, which could be either the $984 that I'm paying or less, such as the $800 they're advertising both on their taped message for the office and in the ads in the newspaper.
What I'm suggesting to the committee is, let's be fair. You have to be fair to the landlords in that they have made a tremendous investment in wanting this maximum rent. They've worked very hard. I was there. I calculated those maximum rents. I know what I'm talking about. They put in asset improvements; they made capital improvements. But you've also got to protect the tenant.
What I'm proposing is, should the landlord bump the rent up to the $1,500, that rent is frozen after the long-term tenant moves out, and any other tenant who comes in has to pay that $1,500, for ever and ever, amen. What I'm afraid is my landlord could bump my rent up to $1,500, I'm out of there. Then they bring in somebody who's going to keep their mouth shut and allow themselves to be cheated by the landlord, and they'll pay only $800 or $1,200, which I can well afford.
I don't want to see a lopsided type of legislation which allows the landlord -- who is unscrupulous, by the way. This particular management company has a long history of cheating tenants, and I've got this on authority from the lawyer who works at the Brampton legal aid clinic. The minute she heard the name of this particular property management company, she said to me, "They have a long history of cheating non-white tenants who are either new Canadians or immigrants and who don't know the law." What this company is doing is trying to weed out people like myself: educated, middle-class, who know better and who will give them a fight.
At the same time, I don't want to be put in the situation where my landlord plays this trick with me and I end up spending thousands of dollars in legal fees trying to create case law which will then provide the protection that I'm asking you to provide right up front. Before this legislation becomes law, just put it in there. It won't cost us anything and we know tenants won't be sacrificed in order for us to recreate the wheel and learn the lessons that are so obvious.
I'm asking that you balance this legislation, that if the landlord does take the opportunity of bumping the rent up to maximum rent, which they are allowed, you also force the landlord to freeze the rent of that particular unit to the maximum rent and hold the landlord to that, so that if I'm gone and I find out they dropped the rent in order to get a new tenant -- because they will never get $1,500 for my unit -- I should be able to sue the landlord for my moving costs. My husband has run in local municipal elections in Brampton at that address, so that address is very important to us, which is why we've been there 14 years.
I'm asking that you make the legislation balanced. So far, it is fair to the landlord only historically, because they've put in the investment to get this maximum rent; they went through blood, sweat and tears. But we have to make it fair to the tenant and we should not allow the landlord to economically evict people such as my husband and myself. We've never done anything wrong; we've played by the rules all our lives. I worked hard, I educated myself. Why? Because I would hopefully not be subjected to unscrupulous people.
Unfortunately, I find they've come through the so-called glass ceiling in society and now they're up where we are, trying to cheat us the way they cheat so many unfortunate newcomers to this country, and I will not stand for it. I'm fighting back and I'm asking that you recognize this, shall we say, flaw in the legislation. This flaw has been there with the Rent Control Act from the very beginning, and I know there are cases, but what has happened is the evicted tenant ends up suing the landlord and it's just a really messy business. They usually end up settling out of court and it's not right. So I'm asking that you recognize this flaw, that it will just cause unnecessary pain and suffering to tenants and give the unscrupulous landlords the opportunity to cheat people, even more to bully people and so on.
Therefore, I ask that you force the landlord to freeze that maximum rent. If they take advantage of the maximum rent, freeze it for that unit so that when I'm gone from that unit because the landlord is pushing me out, I can then subpoena the rent records and say, "What are you charging now?" and if I find out that the new tenant after me is paying $800 or $1,200, I'll bloody sue that landlord. I'll say, "How dare you get me out after 14 years simply because I wouldn't let this management company cheat me."
I would sue that landlord, but I shouldn't have to take this landlord to court and create case law and provide the protection that is so necessary. It's a glaring flaw in the legislation. I think it's an oversight. I think we have to recognize the fact that landlords and management companies are like the human spectrum. You've got very good ones and you've got very bad ones, and the bad ones are really bad. I mean, they're unscrupulous. They'll go into people's apartments. They'll steal. I used to be in the industry and I know what I'm talking about. I was so disgusted I just got the heck out of it, and I'm out of it now.
I implore you, let's keep a balanced view of how we give landlords their due. Let them have their maximum rent. Make sure that the tenants are protected, that the landlord will not use that maximum rent as an opportunity to evict tenants that they willy-nilly want to get out.
Mr Marchese: Thank you, Mrs Jacobson, for your presentation. These are the kinds of stories we have often heard. That's why we brought in rent control as an NDP government, and even then we haven't been able to solve all the problems. That's why tenants have said, "You've got to improve that system to make it better for tenants." What they've now done is turn this whole thing upside down. They call this a balanced thing. They call it the tenant protection package.
We've been arguing on our side for the tenants who are listening to our discussions that there's nothing in it for them. In fact they're eliminating so many provisions, such as the rent registry. It has gone. You won't be able to tell what the next person is paying unless you go and investigate it yourself and maybe they'll tell you. But the rent registry was there so you didn't have to fight anybody and you didn't have to play cop to find that information out. They're eliminating that.
Costs no longer borne, meaning once something is purchased for you, once it's paid off, it's simply reduced from your rent: The developers and the landlords -- I'm sure we'll hear from one of them behind you -- of course like this. Once the elimination of the costs no longer borne is out of the way, whatever they buy just gets added on and on. I know the fellow behind you smiles at this, but this is hurtful to you as a tenant.
Orders prohibiting rent increases: We put that in place because when we knew there was an order against a person, the rents were frozen. These people have eliminated that. There's nothing in here for tenants.
Your case is a sad one. I'm not sure how we deal with that. I'm not sure this government is interested in dealing with that. We'll hear from the questions that come forward. But they're picking on you, quite clearly, to get you out --
The Chair: Thank you, Mr Marchese. You're out of time.
Mr Gilchrist: Thank you, Mrs Jacobson, for your presentation and your comments. In what might be your first exposure to how business sometimes gets done in here, you'll note that Mr Marchese didn't deal with your question, which was maximum rent. I'm pleased to say this bill eliminates that concept.
Mrs Jacobson: But it eliminates it over a period of time and it doesn't help people like myself where there's a --
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Mr Gilchrist: No, sorry, the concept of maximum rent is eliminated and the ability for a landlord to play the kind of games that you're suggesting may happen to you will not be there. This mechanism has existed since 1985. In fact the Liberals added it to apartments over $750 a month only in 1985. Prior to that there was no rent control on units such as the one you have today.
We agree with you that once a rent is established, there should not be an opportunity for somebody to use economic reasons for that. In fact we've gone one step further and have built in anti-harassment penalties that are just staggering. I can't conceive of any responsible landlord getting themselves into that jackpot, because it will certainly seriously dent their income. But the reality is that once the rent is established, you'd have one year to determine whether the rent you're currently paying is legal. It will be frozen, and from that point on they will only be allowed the increases that in our two years, for example, have been set at 2.8%, the lowest in the history of rent control in 20 years. That will be your long-term protection. It may be too late given the scenario you face today --
Mrs Jacobson: I'm talking about maximum rent. There's a $500 difference between what I'm paying now and the maximum rent. All I'm saying is that in order to get me out, the landlord does have the legal right, under the Rent Control Act as well as under the new Tenant Protection Act, to bump it up to $500 just to get me out, and once I'm out of there, it fluctuates.
Mr Gilchrist: No. I'm sorry, Mrs Jacobson, when this act is passed they will not have the right to do that. Your rent is $984, period. They can add 2.8%, and if they show capital improvements that demonstrate --
Mrs Jacobson: I'm sorry, but I've checked with the ministry.
Mr Gilchrist: The entire concept of maximum rent is gone.
Mr Colle: Perhaps you could explain your concern again. Once they get you out of your apartment, what's going to happen to your rent? Do you want to explain that to Mr Gilchrist?
Mrs Jacobson: Yes. Once they get me out of the apartment by bumping it up to maximum rent, which is $1,500 -- I'm paying $984 -- the landlords can then fluctuate the rent according to market demand and put it at whatever he wants. He can lower it, lessen the $1,500 he used to get me out; he can drop it to $1,400, he can drop it to $1,100, he can drop it to $800, which is even less than what I am paying, in order to get a tenant. In other words, he can use the $1,500 to get me out. Once I'm gone, the unit becomes decontrolled. That's the terminology the PCs have used.
Pardon me, my fellow PCs, I'm a member of the PC Party and I'm here today under Dwight Duncan's thing only because I want everybody to play fair here. This is not a partisan thing. We're all affected; we're all Ontarians. I just want you to recognize that once a tenant is out of there, the unit becomes decontrolled. That means the maximum rent then no longer can be applied. It suddenly just bounces back to market availability, market demand, so if there's no demand on the market for my unit, they can keep dropping the rent until they find somebody to take that apartment. They can charge what I was paying, the $984, or they can charge less than what I was paying, but the thing is they've gotten me out of there, they've gotten this thorn in their saddle out of there, and that's what makes me angry. Yes, give the landlord his $1,500 maximum rent, but don't disrupt my life. Don't put me at the mercy of an unscrupulous management company.
The Chair: I'm trying to be fair too. I'm the Chairman and we've gone beyond both your bell and my bell. I thank you for coming. We have to proceed with the next deputation.
Mr Marchese: I don't know if there's a civil servant here who works for the ministry.
The Chair: If you want to take up someone's time, Mr Marchese, we've got a problem here.
Mr Marchese: I do want to take up someone's time to correct what I think Mr Gilchrist was saying. Is there a ministry person here? Yes or no?
The Chair: Do you have a question, Mr Marchese?
Mr Marchese: I want to ask a ministry person who had a hand in drafting this whether maximum rent still exists if you stay in your unit. As I understand is the case, as long as you are in your unit, maximum rent is always there. The parliamentary assistant said it is eliminated. Do we have a staff person who can speak to that?
Mr Colle: I think we'd like to get that verified. There's a real --
Mrs Jacobson: That's the point.
Mr Marchese: Is there a civil servant who can speak to this?
Mr Gilchrist: Mrs Jacobson said she was going to be out. In her situation, will she be faced with this in the next unit she moves into? Not if this bill is passed before you move in.
Mr Colle: You said maximum rent is gone.
Mr Gilchrist: As a concept, it is gone.
Mr Colle: No. You said it's --
Mr Gilchrist: I'm saying it again. As a concept --
The Chair: Members of the committee, we're out of control here. We're going to proceed, Mr Marchese. Your question --
Mr Marchese: No, Mr Chair, I'm sorry. I'm asking you. You're the Chair. Usually, when we're dealing with bills, there's a civil servant sitting around there to assist the parliamentary assistant. Do we have such a person here, yes or no?
Mr Gilchrist: We said yes.
Mr Marchese: Where is this person? Why doesn't this person sit there so she can assist you?
Mr Gilchrist: You have a researcher sitting there. If you don't want the researcher to sit there, feel free to tell the researcher to sit somewhere else.
Mr Marchese: The researcher is not the one -- Madam, are you a civil servant dealing with these issues or not? You're not.
The Chair: Mr Marchese, I don't want to throw my gavel at you, but we have to proceed. I know you're upset. If you have a question, my suggestion is that there will be an appropriate time for questions. We're going to be into clause by clause.
Mr Marchese: No, that's not good enough.
The Chair: We're here to hear deputations. I'm going to rule you out of order. I'm going to ask the next delegation to come forward, which was supposed to have started --
Mr Marchese: As the Chair of this proceeding, you can do what you like. I'm not going to stop until you deal with this fairly.
The Chair: Mr Marchese, the next delegation was supposed to --
Mr Marchese: Mr Chair, no. I'm going to disrupt you until you deal with my issue. We usually have a civil servant sitting around that area, helping the PA when the PA might be confused or doesn't have the information. We don't have anybody here. Why not?
The Chair: I'm going to recess the meeting for five minutes.
The committee recessed from 1617 to 1623.
The Chair: We will reconvene. Mr Duncan on a point of order.
Mr Duncan: Yes. I suggest, as is done in other committees, that the opposition, and indeed the government, has the opportunity to place a question through you to the ministry involved and that that question be recorded, as is the policy in most committees I've attended, and that you as Chair ask that the ministry respond by the next sitting day of committee. I think that would go a long way, certainly in terms of the official opposition, to addressing concerns we may have, as long as we can place that question through you at the time.
The Chair: I agree. Mr Marchese?
Mr Marchese: That's fine. Let's move on.
BUILDING AND CONCRETE RESTORATION ASSOCIATION OF ONTARIO
The Chair: The next delegation is the Building and Concrete Restoration Association of Ontario, Mr Murray Gamble. Good afternoon.
Mr Murray Gamble: Mr Chairman, members of the committee, my name is Murray Gamble. I'm president of the Building and Concrete Restoration Association of Ontario. Our association is made up of contractors, material suppliers and engineers specializing in the restoration of building exteriors and parking garages. We welcome this opportunity to present our views on Bill 96, and we hope our comments will be of value to you.
As many of you will recall, we appeared before this committee last August in connection with the Ministry of Municipal Affairs and Housing's discussion paper entitled New Directions. At that time, we urged the committee to support the provisions relating to capital expenditures in that paper. We were committed then, as we are now, to preserving the province's rental housing stock and to regenerating the jobs lost in 1990 as a result of the previous government's legislation.
Once again we urge you to support the capital expenditure provisions in Bill 96. They are an absolute necessity to provide tenants with the quality housing they should have, to create jobs and to restore our industry.
The current rent control legislation has been devastating. It prohibits owners from recovering costs for major repairs to building envelopes, balconies and parking garages. First Bill 4 and then the legislation now in place, Bill 121, made it financially impossible to spend the required amounts for such repairs, and they came to a halt. The legislation has had a devastating impact on our sector. Roughly 5,000 jobs in our industry were lost at that time.
Meanwhile, the problems in buildings related to the need to repair building envelopes, balconies and garages have become worse with the passage of time. Currently, buildings and garages are deteriorating. We are concerned about safety. The impact on tenants is substantial. They now live in accommodation that is less and less attractive, and if this legislation is not changed, apartments may eventually become uninhabitable.
As we noted to this committee last August, we estimate that of the $10 billion in repairs that studies indicate are required for Ontario's aging apartment stock, about $1 billion is accounted for by the need to repair building envelopes, garages and balconies.
We believe strongly that the proposal calling for above-guideline increases for capital expenditures is a necessity. The 4% cap carry-forward provisions will go a long way to facilitating much-needed restoration of buildings, because they allow the necessary expenditures that have been delayed or postponed for the last few years to be carried out. The work that will result could help reclaim between 30% to 40% of the jobs lost as a result of the present rent control legislation. Our projections indicate that this proposal could create between 1,500 and 2,000 jobs within one year.
We have always contended that we regard the ability to repair buildings as being in the interests of landlords and tenants alike, given the deterioration of structures and the danger that at some point, the integrity of the buildings may be compromised.
As well, we applaud the general direction taken by the new bill in favour of removing regulations which prevent the market from operating. We believe that the fewer the rules restricting the market in rental housing, the greater the likelihood of restoring the industry to economic health.
Accordingly, we support the new rules which give landlords and tenants the opportunity to negotiate rents. Only through the reflection of actual economic conditions can necessary repairs be carried out, buildings kept in good shape, and the jobs that have disappeared be brought back.
I want to conclude my presentation by expressing our appreciation for having the opportunity to present our views and by urging the committee to move ahead with Bill 96 as quickly as possible.
When we appeared before you last August, we stated that while we recognized that new legislation could not be implemented immediately, we suggested that clear signals be given as soon as possible so that landlords would know that the ability to pay for this much-needed restoration would be permitted. This, we suggested, would allow work to proceed without delay, helping address safety concerns and create the jobs then waiting to be generated. I want to repeat this now.
The provisions relating to capital expenditures are an absolute necessity to restore the quality of rental housing in the province. Everyone should be in favour of them because they benefit everyone: tenants first of all, because they will now have the quality housing they deserve; owners, because the provisions allow them to carry out the projects that have been put on hold for so long; our industry, because some of our lost jobs will be restored; and finally, the entire province should benefit because of the economic benefits that will result.
We repeat our recommendation that clear signals be given now that this bill will be passed. Many owners are still holding back, waiting to see what the Legislature will do. The rental housing stock of Ontario continues to deteriorate. The components of this bill which deal with capital expenditures will help restore it. We ask that you pass Bill 96 as soon as possible.
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Mr Wettlaufer: Mr Gamble, in my riding of Kitchener about three to four months ago, or it may be six months ago, we had an apartment building in which a faulty elevator went all the way from the top floor to the basement with a passenger in it; the passenger died. The landlord was given a work order. The landlord demonstrated, through issuance of his financial statements, that he could not afford to carry out the necessary repairs in the building because he didn't have the money, because the income hadn't been there for the last few years. Do you want to comment on that? Do you see much of that as far as landlords are concerned?
Mr Gamble: My comments would be limited to what I perceive from seeing buildings day in, day out; I obviously don't see landlords' financial statements. But I can definitely say this: In my business, in the restoration end of things, there has definitely been an ongoing deterioration of the apartment stock throughout Ontario. Conditions are worsening, and many of these conditions are related to structural issues such as balconies or parking garages, where you could have pieces of falling concrete and bricks. I would concur that there are safety issues presently out there and that the situation has gotten worse in the last five to seven years.
Mr Wettlaufer: Have you been told by any of the landlords that it's because of their worsening financial picture?
Mr Gamble: Very definitely. What we see is that we are putting proposals together for work that needs to be done and landlords basically say that either they can't do the work or they have to do very small portions of it that really do not address all the problems.
Mr Wettlaufer: Safety is a major feature in this bill. Would you agree with that?
Mr Gamble: Yes, I would agree with that.
Mr Sergio: Mr Gamble, thank you very much for coming down to make a presentation to our committee. Can you please expand on one of your comments? You say, "Only through the reflection of actual economic conditions can necessary repairs be carried out." Are you saying you would be carrying out all those necessary repairs in good times, when the economy is good?
Mr Gamble: No. That refers to the fact that under the current rent control legislation, the actual costs required to be expended on these repairs cannot be recovered. The capital expenditure allowances do not allow the landlord to recoup in some cases the millions of dollars required.
Mr Sergio: What percentage could you recoup?
Mr Gamble: Under the current legislation? I believe there is a 3% above-guideline expenditure. I believe, though, the problem is that 2% of that gets diluted out of the guideline increase, which really doesn't leave a very substantial amount to deal with a major capital expenditure.
Mr Sergio: The 3% is now up to 4%, but if you were to expend more money, isn't there a mechanism through which you can apply and be compensated for those expenses, let alone the rate you can increase, that is, the 2.8% and the 4% proposed now?
Mr Gamble: I'm not familiar with all the points of the bill. Another problem is that you cannot carry forward capital expenditure allowances in the current bill, which you can under this proposed legislation. That allows you, perhaps not unlike the way condominiums work, to build up a reserve fund to deal with large capital expenditures. I think that's a reasonable analogy.
Mr Sergio: The government is now downloading the responsibility to the local municipalities. The local municipalities, if this becomes law, can come tomorrow and give you an order to comply immediately or give you a fine, regardless of the economic conditions. How do you feel about that?
Mr Gamble: That's a difficult situation. Of course, I'm not a landlord, so I don't have to deal with that.
Mr Sergio: No, but it infringes on your business.
Mr Gamble: It affects our business. All I can say is that I have been involved with particular owners, and these people were not major corporations who had work orders put on their building for various deficiencies. They were in very difficult situations where they were faced with large capital expenditures immediately. They, plain and simple, couldn't generate the revenue out of their property to do it, so they were caught between a rock and hard place. The only thing I can relate is what I'm told by the owners I deal with.
Mr Marchese: Mr Gamble, I know you're not a landlord, but you speak as if you were. If you're not, you speak with authority on this matter. You say in your paper: "The current rent control legislation has been devastating. It prohibits owners from recovering costs for major repairs to exterior façades, balconies and parking garages." You speak as if you know what you're talking about, it appears, or as if you're a landlord.
My question to you is this, and it's not just from my knowledge or whatever I gather on my own, but rather from what many tenant organizations have said, because they live in those buildings: When we did that tour around the province, they said, "What has happened to the money these landlords have been receiving over countless years?" not only in terms of guideline increases now but in the past, when they were able to ask for increases of anywhere from 10% to 110%. What happened to that money? What happened to the money they asked for beyond the guideline increase for capital repairs, which was 3%? They could ask for it if there was a major problem with their building, and presumably they did. If that money was used, why would these buildings be in such a state of disrepair, do you think?
Mr Gamble: I can comment on my particular area of expertise. In a lot of cases, deterioration, particularly in parking garages where it's chloride-induced deterioration, is of a rather insidious nature. It's deterioration that is not necessarily readily seen or readily perceived. However, it can mean major, major dollars. From my experience, the major problems have been that when these projects come up, a lot of money is needed in a very short time.
Mr Marchese: I understand. Why wouldn't you as the landlord, if you were one, put money aside for that eventuality? Not all the money gets used for repairs, so I have to assume that some of that money should be used for the kind of eventuality you spoke of. Do you think they do that?
Mr Gamble: I can't speak for landlords, but I can speak for my own business. If I couldn't charge an appropriate amount of money for the costs of my business, I'd have a very difficult time staying in business. That's all I can relate it to, sir.
Mr Marchese: But the problem we've got is that there's a guideline increase of 2.8%; there's an extra 3% for capital repairs, and now it goes up to 4% with these guys. You add on top of that property taxes and utilities. Tenants are not making any money. In fact, they're making less than ever before. They don't have anywhere near the kinds of increases that could cope with these kinds of problems. How do they deal with that problem?
The Chair: Mr Marchese, we're out of time.
Thank you very much for coming, Mr Gamble. We're out of time.
MICHAEL ORNSTEIN
The Chair: The next delegation is Professor Ornstein, who is from the Institute for Social Research. You're going to use an overhead, as I understand it.
Mr Michael Ornstein: No, I'm not. What I would like you to see is in some tables in this report, and I believe that's been handed out.
The Chair: Okay. The floor is yours, sir.
Mr Ornstein: I have come before you to present evidence about one specific element of Bill 96: the amendment to the Human Rights Code that permits landlords to use income information in deciding whether an applicant will be permitted to rent accommodation.
Over the last several years, I was retained by the Ontario Human Rights Commission to review statistical data on the effect of commonly used income criteria on various groups protected from discrimination under Ontario's Human Rights Code. I prepared and presented extensive evidence on the effect of income criteria on groups protected by the code to a three-person human rights board of inquiry appointed by the Ministry of Citizenship to consider the issue of income discrimination in housing and to rule on whether excluding members of disadvantaged groups because of their low income violates the Human Rights Code.
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My submission here is not made on behalf of the Human Rights Commission but on my own behalf. I am concerned about the consequences of sections 36 and 200 of Bill 96, which involve an amendment to the Human Rights Code that would allow landlords to use income criteria in selecting tenants.
The fundamental issue, I believe, is whether landlords should be able to refuse to rent to disadvantaged groups -- this would include social assistance recipients, single mothers, young families, other groups -- for the sole reason that they are low-income.
Let me try to make this a little bit more concrete. Typically, landlords who use income criteria use a 30% criterion or a 25% one. What this means is that the rent that's paid should be no more than 30% or 25% of the income of the tenant. If an apartment rents for $700 a month, for example, that's $8,400 a year. The criterion means that individuals or families earning less than $25,200 could be excluded from renting simply on the basis of this rule.
I should emphasize that I'm not concerned about credit checks, references, rental history. The Human Rights Commission has stated that in cases where such information is available, landlords are entitled to do credit checks, check references and rental history and so on. The problem here is not whether landlords should be allowed to screen for creditworthiness; the question is whether they can simply establish an income criterion and say that prospective tenants cannot rent unless they have this amount of money that's set arbitrarily by the landlord.
The present sections 36 and 200 of the bill permit landlords to disqualify tenants who do not have a good credit rating, a good rental history and so on. What I want to talk about are the consequences for the tenant population of allowing these income criteria to be used. I want to point out that allowing these income criteria would mean that tenants who have paid their rent every single month, who have never defaulted on a payment in their lives, could be excluded from renting housing simply on the grounds that their income wasn't high enough.
As you're probably aware, about a third of the private rental market in Ontario involves people on social assistance. I'll show you much more specifically in a moment. The impact will be to allow essentially any landlord to exclude all people on social assistance from housing. I'm not here to make an argument in the sense of an argument; what I want to do is to present you with information that involves analysis of the census data and another survey from Statistics Canada.
There are lots of questions that social researchers can argue about but not show evidence. This is a situation in which there is a lot of evidence. The census tells you how much people pay in rent. It tells you what household incomes are. It gives a description of tenants so you can look at these things empirically. The material is complicated but it's all there. I'm trying to show you what my analysis of the census and other Statistics Canada data sets show.
I have four questions I want to address.
First, I want to ask the question, what kinds of people will be excluded, potentially, from renting if these income criteria are allowed because of the amendment to these sections of the act?
Second, I want to know how many people who are presently renting accommodation could have been excluded if the bill you're talking about now is passed unamended.
Third, I want to ask whether this is a problem we have just in specific areas, perhaps in the very tight housing market in Toronto, or whether this is a province-wide problem.
Fourth, I want to ask, if poor people are in expensive housing, why is that? What does it tell us about the distribution of rents and of incomes?
I can't go over this material in detail, but you have here -- I hope you'll read it at some time -- a detailed description of what I've done. I'm going to highlight the results of this analysis. The details on how this was done are all here.
The first question I addressed was, what is the impact on different kinds of people among renters of this income criterion? Now I'd like you to turn to page 7, if you will, of the handout I've just provided.
I first want to deal with people on social assistance. The social assistance issue is very easy. We know what social assistance rates are. We know a lot about what the distribution of rents is, so you can ask, what it the relationship between social assistance rates and rents in Ontario? The data I'm presenting are from 1990. The data from the census are available from that year and there are no more recent census data.
The results here are much better than you would expect if you were to do this analysis now. That is, the situation I am talking about has worsened, so that the patterns here are certainly exacerbated by the decline in social assistance rates, the 21.6% cut, and a whole series of things that have happened to our economy since that time.
I can summarize on page 7 as follows: If you take a look at the basic needs and shelter allowance components of social assistance and then you take not the absolutely lowest-priced apartments -- I picked low rents at the 30th percentile -- nobody qualifies. That is, if in Metro Toronto landlords in the private rental market insisted that rent be no more than 30% of income, they would be allowed to prohibit every single social assistance recipient from renting housing in this market.
If you turn to page 8, as you are aware, social assistance recipients through the STEP program were allowed to earn some additional money which was not taxed back. Some social assistance recipients had some additional income, and you might say perhaps they'll have more money. The findings are the same: 100% of social assistance recipients, if these income criteria are applied, will be unable to rent accommodation for which there are these criteria. I want to remind you that these people on social assistance constitute somewhere around a third of all tenants.
If you could turn to page 10, and I'm moving along quickly here, there are a number of other grounds of discrimination that are prohibited by the Human Rights Code. They include gender, family status and so on. I looked at various criteria. If you take a look at the comparison between men and women who are single parents, in 1990 27% of men who were lone parents would not qualify and 51% of women. So women are almost twice as likely to be unable to have sufficient funds to meet these criteria.
There is just a whole series of other things. Lone parents are especially disadvantaged. The consequence of allowing income criteria to be used is that a whole series of groups that are protected by the Human Rights Code would be denied its protection.
If you turn to page 12, young people, especially young people under the age of 20, are disproportionately affected by this, so there's an issue of discrimination on the basis of age.
If you turn to page 13, I looked at the combination of race and ethnic origin and citizenship. Non-citizens -- people who are not born in Canada, people who are racial minorities -- all these groups that are protected by the Human Rights Code would be the subject of discrimination, legal discrimination, if income criteria are allowed for housing.
Let me turn to the issue of what the actual situation -- I've talked in principle -- who could be eligible for housing if there were such criteria. If you ask the question, what happens when 30% is the largest amount that rent can be of your total income, an obvious question is: How many people are already in housing but would not qualify if these criteria were applied? If you turn to page 16, you find that 47% of single parents simply do not have the income to qualify for housing under these criteria -- 30% of unattached men, 37% of women who are single and so on.
I asked the question, are we looking at the specifics of a particular market? There are local housing markets. It's not an issue of saying if you live here, 300 miles away, maybe the situation will be better. You have to ask what sort of housing people have in their communities. I did the same analysis for a whole set of areas across Ontario. It's true everywhere. It is not simply that there is a special housing market in Hamilton or in Ottawa or in Toronto. All across the province, the use of income criteria of the kind I am talking about to prevent people from rental accommodation will disproportionately affect the same groups: lone parents, especially female lone parents, young people, people of colour. All these things go together. The patterns are the same everywhere.
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Finally I said maybe the housing market isn't working too well. Maybe the problem is that poor people are in too good housing, and if only they were better housing seekers we wouldn't have these problems. That is, we should say to people whose budgets are strained by the cost of their accommodation: "You're probably a bad seeker. Go out and look."
This question too can be addressed with my data. You ask the following question: If you have people with different incomes that are in a row from highest to lowest and you have rents that are in a row from highest to lowest, how well are they aligned? The answer is that they're very well aligned. In the whole province what you have is people who are well off and who are tenants living in more expensive housing -- it's better housing; it makes sense -- and people who are poorer living in poorer housing.
It's not a perfect relationship. You know why. Some people rent housing for a very long time. The housing cost was low and they were lucky. They ended up in very good accommodation. Some people are better at finding housing than others. A lot of rental accommodation turns over through networks of friends, through relationships, through families. You can't have a perfectly oiled market; it's simply impossible. It's especially impossible when you have a 0.5% or 1% vacancy. So as a practical matter you cannot say that the reason why people live in expensive housing is because they're poor seekers. Poor people on the whole live in low-cost housing, and it's impossible to imagine on the whole that poor people could get out of these binds simply by looking better. It's absolutely impossible.
Why does this happen? It happens because there is a structure of the costs of rental accommodation and it has to do with the housing market. There is a structure of income which has to do with high unemployment in our economy, which has to do with some jobs paying better than others, which has to do with families having more income than lone parents. You know all these things well.
The fundamental problem is that many people in our province have to pay a lot for their housing and they have no choice. That has to do with what housing costs and what income is available. I'm concerned that if you allow the bill to pass unamended, you will allow discrimination against people who are very poorly off now, who have very little in the way of alternatives, and you won't make things better for landlords. The bizarre thing -- I know this material very well -- is that in the legal case, the human rights case I was involved in, the landlords were unable to show that poor people with less income were in fact more likely to default on their rent.
The problem is that this bill hands a weapon to landlords that allows them to unfairly discriminate. Landlords may feel it's in their interests to keep low-income tenants out, but that isn't even true either. I urge you to amend this bill, not to allow income criteria.
The Chair: Thank you, Professor Ornstein. Unfortunately we are out of time, but I thank you for coming and making your presentation.
CENTRE FOR EQUALITY RIGHTS IN ACCOMMODATION
The Chair: The next delegation is the Centre for Equality Rights in Accommodation, Bruce Porter. Good afternoon.
Mr Bruce Porter: The Centre for Equality Rights in Accommodation, you may not all be aware, is an organization that deals with human rights in housing. We've been around for over a decade. We deal with approximately 800 cases of discrimination each year across Ontario and represent the majority of human rights claimants at the Ontario Human Rights Commission.
We deal with many forms of discrimination. The most common is receipt of public assistance, which constitutes about 40% of the claimants we deal with in housing. You are, I'm sure, aware that receipt of public assistance is currently prohibited as a form of discrimination in the code. Other forms of discrimination are family and marital status, which is 26% of our cases; race and ethnicity 11%; disability 9%; and age 8%. In almost all cases, those facing discrimination in housing are low-income. Over half of those reporting discrimination to CERA are on social assistance.
Some committee members may not have been aware until they heard Professor Ornstein, or at least until the last few days, that buried within the wide-ranging changes to rent control, landlord and tenant law and rental housing protection in Bill 96 is a section which would amend the Human Rights Code to effectively eliminate fundamental human rights protections we have relied on in this province for over 15 years.
As the provincial organization specializing in human rights in housing, CERA's primary concern must be to alert this committee to the catastrophic consequences of section 200 of Bill 96. We rely on others who appear before the committee to address the many other provisions of Bill 96. We do, however, register our shared concern about the removal of fundamental tenant protections and about the way these changes will affect the most vulnerable groups in Ontario.
We are concerned that the greatest burden of the removal of rent controls on re-rented apartments will be borne by the most vulnerable groups: young families, newcomers and others who are seeking new accommodation. We are concerned that the repeal of the Rental Housing Protection Act will reduce the supply of scarce affordable housing and increase discrimination; and we are concerned about the weakened security of tenure for all tenants, particularly for those relying on care homes, who should not be denied the equal protection of the law because of their disability.
We will focus, though, on the amendments to the Human Rights Code in section 200 of the act, as this has the most direct and tragic results for our work in human rights in housing. It is, fortuitously, the one section of the act which the Minister of Municipal Affairs and Housing has suggested will be open to amendment, following communications from Keith Norton, the chief commissioner of the Ontario Human Rights Commission, expressing alarm at the effect the amendment would have on existing human rights protections in housing.
Let's look briefly at what section 200 does. The committee members may feel, when first looking at it, that it's a relatively innocuous section. It amends the Human Rights Code to ensure that landlords are permitted to use a number of practices in selecting prospective tenants. Most of the practices listed, including credit checks, references and rental history, are almost universally practised, and practised in a non-discriminatory fashion, in conformity with the Human Rights Code.
There was some panic among landlords in recent years when it was wrongly thought, I think, that the Human Rights Commission was intending to prohibit the general use of credit checks and references, so we do not really oppose amending the Human Rights Code to clarify that those practices are permitted and to clarify any restrictions which may apply to those practices.
We are not, nor is the Ontario Human Rights Commission, challenging the rights of landlords to check prospective tenants' credit and rental history or to refuse to rent to tenants on the basis of a negative record or reference. It's not always fair, for example, to deny somebody accommodation because they have not been able to pay their bills at the Bay but have always paid their rent on time, but we don't see it as a violation of the Human Rights Code. We don't see that there is an argument there, so fine. Clarify that these practices can be used.
There are necessary restrictions to the use of credit and reference checks which can either be included in regulations, as is suggested in section 200, or our preference would be to include it in the Human Rights Code itself. The Human Rights Code does not generally rely on regulations to clarify substantive provisions of this sort. We put the things right into the Human Rights Code.
The chief commissioner has asked the committee to ensure that young people or newcomers to Canada are not disqualified from renting apartments merely because they have no credit records or landlord references. In other words, a bad credit rating or reference is a valid consideration, but the absence of such information is not a valid consideration.
I think that will strike all the committee members as reasonable. Refusing to rent to prospective tenants simply because they have no records, because they're recent arrivals to the province or because they're young families renting a first apartment, is completely unreasonable, as we would be consigning large segments of the population to homelessness.
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None of this requires a major change to section 200, so what's the problem? The problem is that in addition to these assessments of creditworthiness, there's one additional bit of information landlords are permitted to use under section 200, and that is income information.
The effect of including income information is to move way beyond the right of landlords to assess creditworthiness. Instead, it gives them the right to exclude whole classes of people, entire groups protected by the Ontario Human Rights Code, simply on the basis of their income. Landlords would be allowed to refuse to rent to social assistance recipients, single mothers, young people, seniors, people relying on disability pensions, a wide range of groups, even where they have no reason at all to believe these people would be at high risk of default, where they had absolutely good credit ratings and good references from their landlords.
Including income information thus changes it from a provision which ensures landlords can engage in reasonable assessment of creditworthiness to one which virtually gives them the unfettered right to discriminate against disadvantaged groups. It effectively removes the protections in the Human Rights Code for all of these groups that are the most disadvantaged in the housing market.
As the chief commissioner said in his letter to Mr Leach and to Premier Harris, including income information in section 200 "will effectively authorize discrimination against people on public assistance. It will wipe out the protection provided by the code on the ground of public assistance for all practical purposes."
It does not matter that section 200 allows for regulations which could govern the use of income criteria. It is simply impossible to use income information without disadvantaging people on social assistance or single mothers who have the lowest incomes. The commonly used 30%-rent-to-income rule, as Professor Ornstein has eloquently shown, results in the complete exclusion of people on social assistance and the almost complete exclusion of a number of other groups protected by the Human Rights Code.
What is the effect if we wipe out the protection for people on social assistance in this province after having had it in place for 15 years? Receipt of public assistance is the most widespread and destructive form of discrimination in housing in Ontario. Surveys in Metro Toronto have shown that one third of apartments operated by smaller landlords and half of affordable units rented by larger landlords are already refusing to rent to people on social assistance, even when it's illegal to discriminate on that basis.
Receipt of public assistance has been the most common form of discrimination reported to the Human Rights Commission in housing for the last decade. The newly appointed chief commissioner of the Canadian Human Rights Commission has said recently that discrimination against social assistance recipients and the poor is the most pressing human rights issue of the decade. This is not the time to remove the protection in the Human Rights Code for people on social assistance.
In 1981, when receipt of public assistance was added as a prohibited ground of discrimination in the Human Rights Code, landlords came before the committee at that time and said, "You're going to force us to rent to people who aren't creditworthy." It was the same kind of argument as is being made today. The Conservative government at the time rightly rejected that argument, saying there's no evidence people on social assistance are more likely to default on rent, and there isn't any evidence that people on social assistance are likely to default on rent.
In fact anybody who has worked with people on social assistance or has been on social assistance knows that the very first priority, when you're trying to rely on that kind of income, is to pay the rent. You pay the rent at the beginning of the month and then you maybe go hungry, maybe you use food banks. But you pay the rent because that is what defines the difference between you as a person with any dignity left and complete homelessness and destitution. If you're a single mother with children, that is what you hang on to as the most important thing in your life.
You can't look at the rent-to-income ratio and think that is somehow going to suggest whether the person is more likely to default on rent without looking at how important their housing is, how important it is to these people to hang on to it, to not be thrown out into a market with a bad credit rating, and have a bad reference from the landlord and be in receipt of public assistance. You're looking at the most severe consequences imaginable, up to and including relinquishing children to the children's aid society.
Professor Ornstein has shown that the effect of income criteria is not to direct people to more affordable accommodation; it's the opposite. It keeps them out of the lowest-rent apartments and forces them to rent higher-rent apartments, if they're lucky enough to be able to get anything. Restricting choice does not lead people to find cheaper accommodation. It leads them to be forced into more expensive accommodation.
That not only has personal tragic consequences, it has major fiscal consequences for the government. The major component of social assistance costs is shelter allowance costs. If you force people on social assistance into a position where they're getting access to maybe 10% of the lowest-rent apartments or fewer, maybe to none of them, only to the most over-priced and undesirable apartments on the market, then they pay higher rent. Then we're paying higher shelter allowances to cover the costs of those rents.
A government with any interest in saving money has no interest in legalizing discrimination in the private market against people on social assistance. There's been a motion from Metro council that is going to be -- I understand Chairman Tonks is going to be appearing before the committee to express concern about the fiscal consequences to municipalities with the province saying, "You pay a portion of the shelter allowances, but we're going to allow discrimination so the people on social assistance can't get housing without paying far more than anybody else." It's simply irresponsible fiscally as well as morally to permit this type of discrimination.
There is no business justification for the use of income information in selecting tenants. N. Barry Lyon consultants, a real estate consultant firm, did a survey of landlords to find out what practices they use in selecting tenants. They found that 99% of landlords used references. This is a universal business practice. This is what landlords rely on. A minority of landlords used income information -- 40% of large landlords, only 17% of small landlords.
When the Fair Rental Policy Organization did a survey of tenants in Bramalea to try to see whether there was any correlation between rent-to-income ratio and default, the results ended up showing there was no discernible difference. In 1988, defaulters actually had a lower rent-to-income ratio than the non-defaulting sample of tenants. In 1993, it was the opposite; there was no discernible difference. So there has never been a study that shows there's any relationship between being low-income and defaulting.
Obviously, it makes intuitive sense that people who default on rent maybe have found themselves in a position where they can't afford to pay it. But don't mistake that for the idea that refusing to rent to people at the outset of their tenancy is going to reduce risk of default, if you screen out the low-income people then. The people who are finding themselves defaulting are almost always in a position where they've experienced a change in circumstances. They've lost their job; they're had some kind of catastrophic event which meant that an apartment they could previously afford is no longer affordable to them.
Tenants have no interest in renting apartments they can't afford. It's simply a myth. If any tenant tried to rent an apartment where their income clearly didn't cover the cost of the rent, they would have no grounds for a human rights complaint in housing. CERA has never even seen such a case, let alone taken such a case forward. The Human Rights Commission has never taken such a case forward. So don't get tortured about some scenario about a tenant showing up who makes $800 a month, wanting to rent a $1,000-a-month apartment. It just doesn't happen, and if it did and they tried to file a human rights complaint they wouldn't get anywhere.
The issue is income information being used to deny the most disadvantaged groups access to the most affordable accommodation. That is the issue and it has to not be allowed because the consequences of removing virtually all the protections from discrimination in housing in this province would be an absolute catastrophe.
When this government was elected it said it didn't believe in equity, but it did believe in equality of opportunity. This issue happens to be one in which we don't happen to be talking about equity. We're not talking about households who are saying, "Give me a subsidy" to be able to rent their apartment. We're talking about people who are struggling, who are successfully paying 60% or 70% of their income towards rent because they have to. They need housing and they want to simply have the chance to put first and last months' rent down and to pay their rent every month.
If they get a bad credit rating so they don't have any good references from landlords, then the landlord would have some justification in saying, "I don't think you're creditworthy." To rule them out simply on the basis of the fact that they happen to be single mothers or people on social assistance is not fair and it's not good business practice.
It was shown in the survey of Bramalea that they were losing 40 times more in vacancies than they were in default and yet they were disqualifying more than half of the tenant population who were currently paying the rents Bramalea was charging. This is not rational. This is discrimination. It has to continue to be prohibited in the Human Rights Code.
The Minister of Municipal Affairs and Housing said in the Legislature that his main concern is with landlords being able to assess creditworthiness. For that reason, he said he's prepared to consider the amendment proposed by the chief commissioner, Keith Norton, to strike income information from the list of practices which would be permitted.
Please take the minister up on his promise. Propose that amendment and make sure we preserve some semblance of human rights protections in this province.
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Mr Duncan: In section 200, if we simply struck out the two words "income information," and the rest of this section was left, would that be amenable? That would give effect to amending the Human Rights Code and including in the code the other provisions around credit check.
Mr Porter: That would be the simplest way. In our view it's not the best way, simply because as I mentioned earlier, we don't think it's the best way to go to have all these issues put off to regulations.
Mr Duncan: That's my point. I believe section 200 amends the Human Rights Code. It would amend the code to specify it does provide for regulation as well.
Mr Porter: If you don't provide for regulations, then you simply need to add the issue that is addressed by the chief commissioner in saying that when you permit credit references and credit checks as a criterion, you should simply add, "However, absence of such records or information is not to be used as a consideration in selecting tenants." That would cover the issue of young people and newcomers who otherwise would be unfairly excluded.
If you put that right in the code, you don't need regulations, and the committee, which will be hearing this issue and have an expertise on it, will have control over the ultimate effect of the amendment, instead of having all the main issues put off to regulations, where we don't know what can happen.
Mr Marchese: I thank you, Mr Porter, and I thank Michael Ornstein for the presentation. It was quite lucid. I'm not sure there's anything I need to ask. I'd like to leave my time for the Tories to ask you questions.
Mr Gilchrist: At the outset, let me just say categorically we agree with you. It's certainly not the intent of this bill as it's drafted or when it comes through for third reading to have anything that would promote discrimination against any groups, particularly those who are starting out in the workforce for the first time or are recent newcomers to Ontario.
I'm not going to ask you to comment in detail on Professor Ornstein, and unfortunately we didn't have time, but you make reference to some of the same numbers in your report. There's nothing in this bill, there's nothing the ministry has ever said that would lead anyone to believe that 30% is being contemplated as a rule. While the numbers that have been crunched here are fascinating, and I accept them at absolute face value, and based on the status quo a 30% rule would be devastating if that was applied indiscriminately, where is anybody proposing a 30% rule?
I would have thought that since both you and Professor Ornstein have already indicated, and I would agree with you, that things such as credit checks and credit references are already the practice across the province and are quite acceptable in terms of how one enters into a contract, and that's a reasonable thing for two parties to agree to, for that information to be shared, is there not an aspect of income information which, if anything, would buttress the prospective tenant's case?
I can think of a number of scenarios where someone may have been bankrupt but now has a good job. Do you see no opportunity -- again you pick the number -- at 40%, at 50%, or at something that simply relates the current income with no reference to past standing? Are there no circumstances where a former bankrupt, for example, will benefit from having current income information?
Mr Porter: That's a good question. The problem with trying to fix any particular percentage that's higher than 30% is that all the same kinds of concerns that were identified by Professor Ornstein, although less universal and dramatic, will actually be there as well. I'm sure Professor Ornstein would, if given a chance, answer in the same way.
In other words, if you raise it to 50%, you're just going to catch the more disadvantaged, the single mother on social assistance who has to pay 60%. If you put it at 60%, you know there are lots of people who are paying 65% and 70% of their income towards rent on social assistance. So where is the line you're going to be able to find?
The issue you raise about landlords using income information in a constructive way is a good one, but let's be clear. This does not mean that landlords have to somehow cover up their mouths and not ask anybody what their income is. There's nothing in the Human Rights Code that says landlords can't ask questions in accommodation related to prohibited grounds of discrimination. The issue is how they use that information.
In employment you have a specific provision which says: "These questions can be asked in application forms. These questions can be asked in interviews." The code is silent, though, in the area of housing, and we take that silence as a suggestion that it simply wouldn't be that realistic to suggest that someone entering into conversation with a prospective tenant would be violating the code if they slipped and asked, "How many kids do you have?" or "How old are they?" out of interest.
If somebody wants to say, "Look, I was bankrupt five years ago, but I now have an income of $70,000," you don't need to put that in section 200 to permit that. The problem is that if you put anything in section 200 about income information, you're actually going to universalize a minority practice. You're going to have landlords and everybody -- wait till you see the next book that's put out, saying, "These are the things you are permitted to use when you're assessing prospective tenants." The landlord sees income information, the landlord sees credit checks, and that's what they will use.
In other words, you're taking a practice which now is only done by a minority of landlords and you're going to encourage everybody to do it, even though there is no evidence that it's workable or that it does them any good. They'll just do it because that will become the universal practice, with catastrophic results. The simplest thing is just not to deal with it. Don't put in anything about it and leave the code the way it was.
Mr Gilchrist: In all sincerity, would you not see a problem being created? You say that in an employment context you can ask other questions. You could ask them in writing, you could ask them orally. If it is silent in the act and you have a circumstance where, if income is not mentioned in the regulations, and a landlord says, "Listen, by any other criteria, I can't do it" -- if you were a former bankrupt, for example -- what possible negative exposure will there be for the landlord if he even asks that question?
Mr Porter: My sense from everybody I've consulted with is that the list will not be interpreted to be exhaustive. In other words, all it does is say, "Go ahead and use these things." It doesn't say you can't use something else. Leaving it out would simply mean it wouldn't be encouraging them to use it.
The Chair: Thank you for coming, Mr Porter.
URBAN DEVELOPMENT INSTITUTE OF ONTARIO
The Chair: Our next delegation is from Stephen Kaiser of the Urban Development Institute.
Mr Stephen Kaiser: Good afternoon, Mr Chairman, members of the committee, ladies and gentlemen. My name is Stephen Kaiser, as mentioned, and I am president of the Urban Development Institute of Ontario. On behalf of the Urban Development Institute's apartment group, I'd like to thank you for the opportunity to speak to you this afternoon and provide our thoughts on the Tenant Protection Act, Bill 96, from the perspective of the apartment development and property management industry.
The Urban Development Institute's apartment group was established in 1957 to represent Ontario's residential rental property industry. Our members include residential landlords and property managers representing large and small buildings, totalling more than 50,000 apartment suites across Ontario.
In terms of my background, I was at one point in my life a tenant; I've been, on a very small scale, a landlord; I've been involved in the private sector as both a small-scale builder-developer and also as a large-scale builder-developer; and I travelled this province as president of the Ontario Home Builders' Association back in 1993. I think my past experience, coupled with my current role today, lends a useful perspective in terms of the bill we're discussing.
Over the course of these hearings, you will hear from a number of industry groups that will speak generally in favour of the direction of the bill. The Urban Development Institute is part of a group calling itself the Rental Housing Supply Alliance which was formed in 1995 to address the issue of how to overcome the barriers to rental housing in Ontario. That group also consists of the Fair Rental Policy Organization, the Ontario Home Builders' Association and the Metro Toronto Apartment Builders' Association. Collectively, we've worked since 1995 to find a solution to the rental housing supply problem that exists in Ontario today.
Clearly, there are a number of issues that must be addressed to correct the current situation. All these other areas were clearly spelled out in a report prepared for the government by Greg Lampert in November 1995. These areas included development charges, property taxes that give unfair treatment to rental buildings, the effects of the GST, municipal fees, building code requirements, along with a number of other fees and regulations.
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We support the direction of Bill 96 and believe it represents a step in the right direction in terms of addressing those problems outlined by the minister this morning, those problems being that the rental housing stock is rundown in this province, with over $10 billion of repairs needed to rental buildings across Ontario; maintenance in some cases is poor; new rental construction is almost non-existent; and vacancy rates in many cities are low. Clearly there is a problem when the statistics show that only 20 rental units were produced by the private sector in the GTA in 1995 and, at the same time, 610 units across the province as a whole.
Rental housing is a key piece of the housing system in Ontario, and the rental housing sector is clearly broken. The reason for this is clearly the housing policies of previous governments that have vastly distorted the market. There is no longer an environment that encourages the private sector to build rental units, even with the low interest rates and low vacancy rates we are currently experiencing.
The legislation before you is one piece of a puzzle to restoring a climate that results in the private sector investing in new rental stock. We cannot continue the status quo and we certainly cannot afford the social housing program of the previous government. Collectively, we must find a solution. At the same time, though, we must remember that we are talking about something that is not just bricks and mortar or a business, but that today and tomorrow is a home to a young person, to a married couple, to a family or a retired pensioner.
I've brought with me copies of our position paper which deals specifically with certain areas and sections of the bill. I'll leave that with you when I depart. When planning today's presentation, I debated whether to read 20 minutes of specific concerns or to use the time to discuss the more general provisions of the legislation. I think our time, especially as it's early in the standing committee process, would be better spent discussing the general direction of Bill 96; however, I hope you will take the time later to review our more specific comments. At this time, I'd welcome any discussion or questions you might have.
Mr Marchese: Mr Kaiser, I'm looking at the list presented by Mr Lampert. He says there is a serious gap, a $3,000 gap per unit, that exists at the moment, and unless we overcome that there won't be much housing being built. First on the list: reducing development charges. The government has done that a little bit, but obviously not much.
Mr Kaiser: We tried, as you'll recall.
Mr Marchese: They tried too, but Hazel McCallion resisted it, so you guys had a hard time. That's a little reduction that's not going to be helpful.
Equalizing property taxes: It's $1,200 to reduce that gap. When cities do this, if they do it, they have a serious political problem on their hands, right? You will admit that's a problem.
Mr Kaiser: This decision to reduce taxes has been handed down to the local level, and that's something to be debated.
Mr Marchese: They've got a problem, though. If they want to shift from one to the other, someone's going to lose, someone's got to pay.
Mr Kaiser: Someone has to bear that cost.
Mr Marchese: It's a problem for cities, politicians in particular.
Mr Kaiser: It's certainly going to be a debate within the municipality, yes.
Mr Marchese: For sure. Then you say halve the GST. That's going to be a problem.
Mr Kaiser: The federal government has a new mandate, and hopefully we can continue those discussions.
Mr Marchese: God bless. So that's a problem.
Streamline regulations on building: That's 400 bucks. Halve the CMHC mortgage insurance fee: It's 110 bucks. Lower administration due to reform of rent regulations: By that, I think they're referring to this bill.
Mr Kaiser: To a large extent.
Mr Marchese: That's 200 bucks. Eliminate provincial capital tax: That's $370.
We've got a problem. I'm assuming that if we don't deal with this, we're not going to get anything built. Do you agree?
Mr Kaiser: No, I don't agree. You've listed a number of concerns. The actual step of building the building is a decision made through two ways. One is a decision made through looking at a pro forma, a balance sheet, in terms of putting all the costs together and making the decision about whether to build based on the return of the building. That's a business decision. The other part of the decision is a little more intangible, and that's based on the business climate or the climate that exists for that industry at the current time. This legislation will certainly cover off on creating the better climate for the rental housing sector in terms of going ahead and reinvesting.
But you are absolutely right. There are other areas that need to be covered off, and each decision will be a different decision. Each pro forma, as an individual builder looks at it, will be different, based on their situation, based on what they've put the land component in at. You've probably seen in the Toronto Star, just as I have, that Metro is discussing perhaps putting land in at very low cost, if not zero, to try to get the industry building rental housing. You're absolutely right, Mr Marchese. There are many ingredients that go into this, but this legislation is certainly one of them.
Mr Marchese: I'm very worried, because under a Liberal climate up there and provincial Tory climate down here, you'd think things would be improving a whole lot. Some people think they are, yet unemployment is very high. I'm worried about the housing problem. I think we've got a crisis now. This government says they don't want to build, and you support them because you obviously consider social housing a problem, at least being done by the provincial government. So we have a housing crisis, where people on low incomes are going to have a hell of a time finding a place, including how this bill is going to affect them.
You seem to think the tenants will be all right by this legislation, I guess. Given the shortage of housing, you are again assuming that everything should be okay, by and large, for these people. Is that your sense?
Mr Kaiser: To back up, I think we're at a fork in the road. Either we progress down the road your government was following -- and we can be frank about that. The social housing program created some very good housing for people and there are some very good people connected with that system. I've been at Christmas parties of co-ops and whatever, and I've been inside co-ops. The problem, though, is that we can't afford to continue to build that any more as a province and we can't afford to subsidize all the people who get subsidized in there. So we come back to a fork in the road. As we're at that fork, we either go back down that road or we try and find a way to stimulate the private sector and get them building rental housing again.
Mr Gilchrist: Mr Chair, how much time do we have?
The Chair: Each caucus has four minutes.
Mr Gilchrist: That will be adequate time. If you'll forgive me for one second, Mr Kaiser, pursuant to our past practice, I wanted to reopen something we had discussed earlier this afternoon. I said that at the first opportunity -- Mr Marchese, I certainly did not mean to mislead you or anyone else. I had assumed that Mrs Jacobson, when she said she had declined the landlord's request to go to $1,500, had decided to move. That is why I said, "You will not face maximum rent." I certainly did not mean to suggest that for any building prior to your exclusion, which was 1992 or earlier, which is covered by rent control, there would not still be a grandfathering. I was referring to her case. If that distinction was lost, forgive me. I did not mean to mislead you.
Mr Kaiser, I'm intrigued. Mr Marchese referred to the Lampert study, and he has done that a couple of times. I don't know if you're familiar with that report or the fact that there was 1996 update to the original report which was tabled in the first year of our mandate. Are you familiar?
Mr Kaiser: Yes.
Mr Gilchrist: Not to put you on the spot, but you may recall that the update incorporated a lot of the things that have changed in this province in the last two years, some of them considerably positive as regards the developers of buildings like this. He made the observation that one of the most compelling and important changes needed to be the reformed property tax. I'm sure you're aware that, on average, people who live in apartments are paying twice the amount per square foot in property taxes as the same size freestanding home and that we have recently passed a bill that will allow municipalities the opportunity to redress this. As a ballpark figure, on average you're looking at about $1,200 a year, which Mr Lampert built into his report.
Would it be your considered opinion that a $100-a-month differential, particularly given that this bill allows, in fact almost demands, a flow-through of property taxes, if they're reduced, to the tenants immediately change the formula to allow the construction of apartments to be a viable business again in Ontario?
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Mr Kaiser: To answer your question, Mr Gilchrist, it's somewhat like a tap. It's hard to say at what point in time construction will start, what's the exact point where you can say, "That'll do it." This legislation may at some point be the catalyst that leads certain companies, again based on their pro forma and where they're at, the land they're holding etc, to say, "Okay, we're going to go ahead and build."
Actually, I've been involved in discussions with companies on the verge of looking at building. To be candid with the committee, the rental units they're on the verge of building are a higher-end rental unit. But they are on the verge of building rental units, to start the process to increase the supply in the province.
In answer to your question, Mr Gilchrist, yes, every little bit helps. Certainly something as large as that is a big step in terms of getting more rental housing built or freeing up the climate so it could happen.
Mr Gilchrist: We certainly call on the municipalities to avail themselves of this opportunity.
There's one last thing I would ask you to comment on. We hear a lot discussed about the fact that most construction has been in condos or, as you mentioned, perhaps in high-end rental. What will landlords do if, as is the case today, at anything over $900 a month, the math is that there are affordable freestanding homes, given the mortgage rates available today? Given that there is not a high demand in that level of apartment rentals, what will the landlord do if they can't rent at, say, $900 a month? Is it your experience that they will let it sit empty, or will they try to get $800, and if they fail to do that, will they try to get $700, at which point a tenant would be locked in, in older buildings?
Mr Kaiser: If you look across the GTA, especially in the high-end units, the high-end units aren't anywhere close, in some cases, to their maximum allowable rent. That's strictly a function of the market.
Mr Stewart: Previous speakers suggested we should not be looking at income checks on people; only refer to credit info and references. Whether it is representative of your organization or not, what are your comments on that?
Mr Kaiser: To be candid, you have some speakers coming forward who deal in the rental industry on a day-to-day basis and can probably answer that question a lot better than I can.
Mr Stewart: But you did have small rental units and you built. Do you not feel --
Mr Kaiser: As a landlord, it's a business decision. To have the best facts available in making the decision to letting out the place you own certainly helps in that decision.
Mr Sergio: I have exhausted all my questions for Mr Kaiser from previous times. I'll bow to my colleague. He brings nothing new, but I guess he's doing what he has to do on behalf of the industry, and I commend him for that.
Mr Duncan: Thank you for your thoughtful presentation. We do not agree with you on the issue of price regulation. We believe there is a place for price regulation, that there ought to be price regulation.
However, we are not unsympathetic to issues around property tax reform. The way the government has handled it, we think you won't see any benefits from that. They've left it to the discretion of individual municipalities at the same time that they're downloading a number of municipal services and downloading approximately $1.6 billion in additional costs. I'm not optimistic we will see that at the municipal level, particularly in municipalities with a large urban core, where this is such a key issue.
There have been a number of amendments to the Planning Act that may or may not cause a breakthrough in the so-called psychological barrier to investment in rental accommodation in Ontario.
We've yet to see the building code amendments. I'm given to understand they will be out later this year and there will be an opportunity for full public discussion.
The same again: reform to the Development Charges Act, which has long been an issue of concern.
On the issue of capital taxes, the government has also indicated they're still assessing it.
What we're left with, in my view, is a situation where a number of Lampert recommendations have not been acted upon. We agree with landlords that there is a problem, and there is likely to be a growing crisis in the supply of rental housing. We think we can achieve the breakthrough in the so-called psychological barrier to investment in rental accommodation in Ontario and at the same time have a meaningful form of price regulation. We think price regulation, or rent control, is an important protection, particularly in large urban areas.
I thank you for your presentation and on behalf of the official opposition want to say that we are not unsympathetic to a number of the issues you've raised, but we do part company on the issue of rent control.
Mr Kaiser: I guess we would say back, Mr Duncan, that we don't think it's up to the private sector to subsidize the housing stock of Ontario, and we need to make some fundamental changes in that direction.
Mr Duncan: Fair enough.
The Chair: Thank you, Mr Kaiser.
Mr Kaiser: Thank you very much. We appreciate it. If members have any questions down the road, I'd be happy to entertain them.
The Chair: The last delegation is the small landlords' association, Shawn Makhdumi. Clerk, perhaps you could call the name out into the hall to see if he's here. Not here? Thank you. Mr Makhdumi is not here, for some reason, so that concludes --
Mr Wettlaufer: On a point of order, Chair: Could we have a five-minute recess? Perhaps if they're late we can come back.
The Chair: Actually, this delegation was supposed to have started 10 minutes ago, so he's already 10 minutes late. I'm in the hands of the committee. Does anyone else feel --
Mr Gilchrist: I think 10 minutes is plenty.
The Chair: That concludes the presentations for this afternoon, ladies and gentlemen. The committee will adjourn until June 19 at 10 am. We will be meeting in room 151.
The committee adjourned at 1736.