Tuesday 6 August 1991

Rent Control Act, 1991, Bill 121 / Loi de 1991 sur le contrôle des loyers, projet de loi 121

Ontario Chamber of Commerce

Anthony Seljak, Richard Hissey

Richpark Investments Ltd

Valiant Property Management

Beyond the Living Room Committee

Sydney Steinman

Whyy Mee Family Counselling Foundation of Metropolitan Toronto

59 Spadina Road Tenants Association

Havenbrook Realty Co and Morray Investments

Ontario Coalition Against Poverty

Frank Marcoccia

Dennis Wharton



Chair: Mancini, Remo (Essex South L)

Vice-Chair: Brown, Michael A. (Algoma-Manitoulin L)

Abel, Donald (Wentworth North NDP)

Bisson, Gilles (Cochrane South NDP)

Drainville, Dennis (Victoria-Haliburton NDP)

Duignan, Noel (Halton North NDP)

Harrington, Margaret H. (Niagara Falls NDP)

Mammoliti, George (Yorkview NDP)

Murdoch, Bill (Grey PC)

O'Neill, Yvonne (Ottawa Rideau L)

Scott, Ian G. (St George-St David L)

Turnbull, David (York Mills PC)


Hansen, Ron (Lincoln NDP) for Mr Bisson

Jordan, Leo (Lanark-Renfrew PC) for Mr Turnbull

Poole, Dianne (Eglinton) for Mr Scott

Sola, John (Mississauga East L) for Mrs Y. O'Neill

Tilson, David (Dufferin-Peel) for Mr B. Murdoch

Winninger, David (London South) for Mr Drainville

Clerk: Deller, Deborah

Staff: Richmond, Jerry, Research Officer, Legislative Research Service

The committee met at 1402 in room 228.


Resuming consideration of Bill 121, An Act to revise the law related to Residential Rent Regulation.

Reprise du projet de loi 121, Loi révisant les lois relatives à la réglementation des loyers d'habitation.

The Chair: The standing committee on general government is called to order. The committee will continue its hearings on Bill 121, the government's rent control legislation. We have a full slate of presenters for this afternoon.


The Chair: The first presentation will be made by the Ontario Chamber of Commerce. Would the presenters come forward and identify themselves for Hansard and for the benefit of members. The committee has allocated 15 minutes for your presentation. You may wish to retain some portion of that for questions and answers.

Ms Matthews: Thank you, Mr Chairman. My name is Linda Matthews. I am chairman of the board of the Ontario Chamber of Commerce, and with me this afternoon is Don Eastman, who chairs our economic policy committee. We thank you for the opportunity to appear this afternoon.

As most of the members are aware, the Ontario chamber represents 65,000 businesses in the province, and we do this through 167 local chambers and boards of trade. Our mandate covers small, medium and large business, and includes both tenants and landlords.

We appeared before this committee with respect to our concerns on Bill 4 in January, so the chamber's views on Bill 121 should not come as a surprise this afternoon. The Ontario chamber stands on the principle of freedom of enterprise.

I think this group would agree that one of the major stories of the 1980s was the collapse of the Iron Curtain. Most of those countries that were part of the Soviet bloc are in fact abandoning centrally planned economies and are now trying to harness the power of market forces in order to improve their countries' positions and economic position. The transition for them will be difficult and they will not all make it, but the point I am trying to make is that all they needed to convince themselves that the effort was worth it was to look at their performance over the past decades and that of the market-driven economies.

Some of the most important things we do as a society we do through the public sector. Education, health care, social assistance are all vital, but quality and affordability in these programs is only possible with a strong and vibrant market economy.

At the same time that one segment of the world has discovered the power and the potential of market forces, we continue in Ontario to, shall we say, flog a horse that is already on its knees. We probably could call it naïveté rather than ignorance. Our joint economic naïveté has resulted in abuses to our market-driven economy, and this has seriously eroded our capacity to provide the standard of living and the quality of public service that we in this province expect. Unfortunately, by continually turning to government for regulation and control of the private sector, we inadvertently continue to add to the cost of doing business in this province, making our businesses less and less competitive and making the decision to do business in this province less and less attractive.

Government rent control is only one of many examples where we continue to damage the economy and to hurt, unfortunately, the very people we are trying to help.

I ask Mr Eastman to make some specific comments with respect to Bill 121.

Mr Eastman: The purpose of today's hearing is to examine the specifics of Bill 121, not the principles behind it.

What is the best way to strangle this part of the economy? With respect, the only good rent control is the dynamic, efficient rent control that is imposed not by the iron hand of government but by a market that is allowed to work. Renters should be permitted the opportunity of choosing between competing units in a world where vacancy rates are high enough to permit choice, and landlords should be forced by the market to compete on the basis of price and quality for tenants who, by virtue of a real vacancy rate, have real choices available to them.

We in the chamber have not seen the thorough economic analysis that should have accompanied this bill. I guess for us the concepts of thorough economic analysis and government rent control are mutually exclusive.

Economic analysis is not hard. All it requires is honestly putting yourself in the shoes of each of the players in the market and seriously working through the thought process. It can sometimes require several attempts, but it is basically a pretty simple process.

The consequences of Bill 121 should be obvious, and they are not pretty. First, put yourselves in the shoes of the person who may be considering new rental accommodation. If you build a new unit, you can charge whatever the market will bear for new units, but once that rent is struck, you are stuck with that base. Unless you have a bent for self-destruction, you will not build unless you are convinced that you will be able to charge rents that provide a comfortable return and also cover your concerns about future risks. This means that new construction will wait until a desperate shortage of rental units forces rent for new units up to the point where it provides not just good returns, but also generates a risk premium sufficient to cover all uncertainties about future legislation.

Next, try the shoes of someone who is currently an owner of rental accommodation. Let us first try and set aside the frustration at legislation that strips away a substantial portion of your property value without compensation, and simply look at future maintenance and upgrading decisions.

Under Bill 121, the more you do, the more you get penalized. The closest you can come to full cost recovery is to do as little as possible. If the units start to get a bit shabby and rundown, they can still be rented as long as vacancy rates remain low. Upgrading? Not likely. All that hassle for at best no return and at worst out-of-pocket losses? Incentives to upgrade the quality of existing rental units are non-existent.

How about the shoes of a first-time tenant? Choice of accommodation will be extremely restricted: either prohibitively expensive new units or very scarce older units with generally poor standards of maintenance.

Life for existing tenants is no bed of roses either. Basic safety and health maintenance is done; the rest seems to slip. Housekeeping of the public areas is less than it should be. Things like graffiti stay up longer than they should. You mention to the landlord that it would be nice to have a new stove and fridge. For some reason, the landlord is not very interested. You would like to move to nicer rental accommodation, but there does not seem to be any, unless you go new and very expensive. The closest thing to a viable alternative is to buy your own house or condominium unit, but you do not have the savings and you are not ready to make that kind of commitment. Blame the landlords again.

Let us summarize the economic story. Rental vacancy rates will remain near zero. The quality of existing rental housing stock will deteriorate. New construction of private rental accommodation will be slow, and the few units that are built will be expensive for the quality provided. Government will be increasingly called in to provide housing units to supplement a market that has been forced to fail. Resources that could and should have been used productively elsewhere in the economy will be sucked into a non-productive bureaucracy of government rent control.


If you are interested in slowing the pace of strangulation of this important part of the economy, there must be better provision for cost recovery. Bill 121 does not make a reasonable attempt to recognize the legitimate expenses faced by landlords. It is irresponsibly restrictive on major repairs, on capital improvements and borrowing costs. The proposed cap even limits the ability to recover an exceptional increase in operating costs such as hydro and property taxes.

We have heard some concern that the objective of this government is the elimination of private rental accommodation and its complete replacement with public housing, and Bill 121, for some, is seen as a major step towards that objective. If that really is the objective of this government, there is a moral obligation to stand up and say so. We believe that few people in this province would accept that objective, and most would vehemently reject it.

If that is not the objective, then you have an equal responsibility to fundamentally rethink the role of government rent control in a market-driven economy. At a minimum the following changes should be made to Bill 121:

The capital expenses limit must be made more flexible by either increasing the percentage allowed or extending the amount of time allowed to recover costs.

Cost increases beyond a landlord's control, such as those for water, hydro, insurance and mortgage rates, must be permitted to flow through to tenants, as well as any rate decreases.

The provision for rent rollbacks in the event of inadequate maintenance should be reviewed. This type of revenue uncertainty seriously constrains access to capital markets.

The implications of Bill 121 actually run far beyond the rental accommodation market. The philosophy that it appears to reflect and its far-reaching economic naïveté provide a chilling message to the business community at large. That message, and its consistency with other messages from this government, is damaging investment intentions and job opportunities in this province.

We are not here to point fingers. There are multiple culprits in this ongoing economic disaster. We are here to try and stimulate a fresh look that uses the experience of the past decade to bring us to a more positive future.

Mr Tilson: The government has made it quite clear in its position as to what it intends for housing. Mr Rae, of course, said it during the famous newspaper interview that everybody quotes, and if you do not like that, the green paper has made it quite clear. On page 3 they state that after 1991 virtually all anticipated new rental housing will be social housing. In other words, that is all that is going to be built. They have made that statement, and that is clear. They intend to take over the housing industry. What effect will such a policy have on the investment confidence and on the quality of life of the tenant in this province?

Ms Matthews: Maybe I could respond to that, because I would like to relate two examples that were both given to me one week after Bill 4 passed into legislation. One of our board members, who happens to be one of the landlords I referred to in my opening remarks, was in the position of selling two of those buildings, and when Bill 4 passed, the prospective purchasers walked away. The other was also a board member of the Ontario chamber who is in the financial accounting business and has foreign clients with money to invest in this province; $25 million was withdrawn that week as capital that had been available for investment in this province. So to answer your question with two examples, I think the implications are clear.

Ms Poole: Thank you for your presentation today, even though parts of it were quite chilling. Unfortunately, they may also prove to be quite realistic. I was interested in your comments about building new rental accommodation. You have pointed out some of the difficulties with the current government plan to promote new building. What would you recommend in its place for building new residential accommodation?

Ms Matthews: With respect to lengthening the time available?

Ms Poole: Yes. What would you recommend, that there be no rent controls placed on the building for 10 years after it was built?

Mr Eastman: I think you have to put that in the context of where you really believe the long-term future of rent controls is. If you want to have a rental accommodation market that is primarily privately based and provides the kinds of choices that are inherently available from a market system, then we have to start looking at ways of freeing that system up so it can start to work.

Ms Matthews: In other words, phasing out.

Mr Eastman: Yes. One of the first ways of doing it would be permanently --

The Chair: Order, please. Thank you. Sorry. Ms Harrington.

Ms Harrington: I would like to respond to some of the topics and questions you brought up. First of all, you asked, why rent regulation overall? It is consumer legislation. You know that obviously in life we have regulation, whether it is licensing our cars or environmental standards. That is part of the way we do business in this province.

You mentioned health and education. Health, education and housing are basic human rights recognized by the United Nations, and legislation and regulation of the housing market has been enforced under Conservatives and Liberals in this province, as you know, for many years. What was not in place was a good system of fair regulation. It was a system that was used and abused for many years and was not fair to protect the tenants.

Now you asked what our objective was in this legislation. We want a system that will work. We want a system that will protect tenants. We want a system that will encourage good housing, good standards of maintenance, and we want to work with landlords. As you know, about 85% of landlords -- 83% I believe it is -- do not go to rent review every year. They can exist and maintain their buildings within the existing guidelines.

Ms Matthews: But there are fewer and fewer of them because they are getting out of that business.

The Chair: Thank you. The time has expired for this presentation. Sorry to cut you off in midstream, but I am under orders from the committee.


The Chair: The next presenter is Anthony Seljak. Anthony, we will follow the same procedures. You have 15 minutes. You can withhold some time for questions. Please identify yourself and your guest.

Mr Seljak: Thank you. My name is Anthony Seljak, and my friend here is Richard Hissey. I and my family own an apartment building in Toronto consisting of 57 units. What I am going to address in the legislation put forth in Bill 121 is mainly section 17, regarding tenant consent to capital expenditures.

We have in our building, for example, appliances that are over 33 years old. The tenants in the building do not want new appliances because of the possibility the rents may increase by 1% or 2% above the yearly guideline. Unfortunately, this causes us to repair the appliances frequently at considerable cost. The tenants are satisfied with this situation since they do not have to pay for the many service calls that must be made.

Similarly, our single-pane steel windows, which are slightly warped from age and very energy-inefficient, cannot be replaced because the tenant association feels the windows are good enough, again mainly because most of the tenants do not want the rents increased at all. We just spent $6,000 trying to recondition these windows, with very little success. However, we will not be able to replace them because the tenants do not think it necessary.

We recommend that this bill allow for an independent party, such as a building inspector, to determine if the repairs are necessary when the landlords and tenants cannot come to a common consensus on capital expenditures.


Presently, this bill tells tenants not to allow any capital expenditures, as the landlord is responsible for the maintenance of the building no matter what the costs are. The tenants know they will not have to pay for any of the maintenance costs.

Since the majority of tenants do not want any improvements which they will have to pay for, this new law will result in a loss of jobs for tradespeople and a severe deterioration of the building stock in Toronto. We hope this law is adjusted so the necessary capital expenditures can be made and are not just left up to the tenants' discretion.

Now I would like to introduce Richard Hissey who would like to make other points regarding this bill.

Mr Hissey: I also am the landlord of one apartment building. It is the building at 250 Oakwood Avenue actually and has 24 suites. I would like to confine myself here to just four points. I believe the points I am making are practical suggestions. I realize I cannot come here and expect the committee to recommend that rent review be abolished. The government has a certain program. The points I am raising, I believe, could be implemented within the context of the program that is contemplated by the government.

I realize there are some reasons why the government has decided to embark on Bill 121. There were certain issues raised by tenants, such as unnecessary renovations: Why should tenants pay for improvements they did not need and did not want? There was the question about affordability, whether it was right for tenants to be forced out of their homes because the rent increase was more than they could afford. Also, there was the question of whether financing costs should be a reason for rent increases, because obviously it did not result in any improvement to the building.

The proposed legislation incorporates or seems to incorporate an idea from the previous legislation, that is, that of a guideline increase. The observation I wish to point out to the committee is that of course the new guideline calculation is somewhat different from what it was under the previous legislation.

Now a smaller portion of the rent control index is incorporated into the guideline, and although I really cannot comment because I do not have the statistical information available on the effect on other buildings, in the case of my own building, I must say I am going to find this very difficult to live with.

I did some accounting for the costs over the last few years. I find that between 1987 and 1990 my cost increases for taxes, utilities and non-capital repairs were $20,737, or over 30%. For the same period, the total compounded guideline increases were 14.5%. That is equivalent to $20,313 on 1987 income, which is almost the difference.

The point is, though, that this includes the 1% supposedly available for profit and also the 1% supposedly available for the write-off of capital expenditures. So in my case I have used up all of the guideline increase in increases in costs and I have also had to subsidize it.

During the consultation process, I must say I did not myself hear of anything as to whether the guideline should be recalculated. I would like to have this question raised and dealt with by the committee, and one of my suggestions is that the method of calculating the guideline increase not be changed.

That is my first point, and really it leads on to my second point, because the idea, the philosophy behind a guideline, as I understand it, is that all apartment buildings will experience a certain increase in costs every year, so instead of every apartment building applying for rent review, there is a calculation made of what these common cost increases are and it is permitted to rise by a certain percentage to cover those cost increases.

Accompanying that, there is a provision in the proposed act for an increase based on extraordinary operating costs. Now the point I have to make here is that in the proposed legislation, the only categories under which the increase is permitted are for taxes and utilities, which of course are certainly beyond the control of the landlord. But my point is that there are certainly other cost categories that are equally beyond the landlord's control.

For example, if he were to have a fire in the building or something like this, he might have a very serious increase in his insurance costs. He has got no machinery in the proposed bill for getting an increase based on those increases in costs. There are also significant maintenance obligations in the bill, and if he gets an increase in maintenance costs, he apparently cannot pass that into the rent.

In the case of financing, financing costs are one of the most significant costs in the case of our industry, and these costs are apparently not the basis of any increase in rents. I feel quite concerned myself as to what is going to happen if there is a serious increase in interest rates in the future.

My third point is also something that is hidden in the bill. It is about the threshold for obtaining an increase based on capital expenditures. I do not know whether I should explain that, but it is my understanding of the legislation that is to be replaced that when a landlord applies for rent review, there is a threshold of 1% of the building income that must be passed before it is worth while for a landlord to apply.

To put it a different way, unless the increase in rent that is generated by his capital expenditure is more than 1% of his income, he cannot obtain an increase in rent beyond the guideline, because the guideline includes 1% for capital expenditures and when he applies for rent review, then the base upon which the increase is erected is 1% below the guideline.

In the new bill this is going to be doubled to 2%. Again, I must tell the committee I feel very discouraged by this. Even the old legislation was a difficult law to live with from the point of view of how much money has to be spent. In the case of my own building, the amount of money I need to spend in order to generate a rent increase based on capital expenditures would be $19,000, which is more than enough in a way, because under the new bill it would be $38,000, which for me at least would be a small fortune.

I must say I do not know where I would obtain the money to finance any large capital expenditures. If I were to go to the bank and say, "I need $37,000 and yet there will be no rent increase, even though I am spending this amount of money," I think it is very doubtful I would get the money.

My last point is about the cap. I will have to leave it to other presenters to discuss what the size of the cap should be or whether there should be a cap at all. As I said at the beginning, I do not want to get into areas that are really outside of that. The point I simply want to make here is that I noticed in the proposed legislation the cap is all-encompassing and it covers both capital expenditures and operating cost increases. So it would be extremely unfortunate for a landlord who both had to make capital expenditures and suffered from extraordinary operating cost increases within the year.

It seems to me that a more appropriate method of dealing with the situation would be to exempt extraordinary operating cost increases from the cap and also not include those increases when calculating the cap, if there is to be one at all, on increases generated by capital expenditures. That is my presentation.


Mr Mammoliti: Thank you for coming down. I appreciate all the comments.

There are a number of things you have said and I disagree with most of them, to be honest with you. But when we talk about the caps, I am wondering whether you can elaborate. You say that you do not want to give your opinion on the caps, but in this particular case it may be important for us to hear that.

Mr Hissey: My opinion on the caps is that there should not be a cap at all. But I have to live with reality, and I realize the government has a certain program and that it was elected on the basis of a certain platform. What I am trying to do is make suggestions which could be followed within the context of the government program, and if there has to be a cap, I would still like my suggestions to be followed. I think if they were followed, first of all, then we would not get caught with extraordinary operating costs and capital expenditures both covered by the same cap.

Second, I suppose the result would be that the landlord could get an extra 1%.

Mr Tilson: The four socialists over there -- is that to your right? -- will answer most of your questions by saying that landlords in the past have ripped off the system long enough. They have made lots of money and they should have all kinds of money to pay for these various expenditures that you are talking about. In other words, as Mr Mammoliti said, they will simply say: "We disagree with what you are saying. You've made lots of money. Tough. You can squawk all you like." What is your response to that?

Mr Hissey: I do not believe that all of the expenditures experienced by landlords are predictable. I can understand the point that is being made. The point that is being made is, when somebody buys a building he should make some allowance for capital expenditures and things like this. However, having said that, there are some things which happen which cannot be predicted, an increase in taxes, for example, and should be incorporated in any rent review legislation.

Mr Brown: I am interested in your response to the chamber of commerce's brief that just preceded yours. They analysed what a landlord would do under Bill 121, and what they seem to be saying is that most landlords will do nothing. They will minimize the amount of money they spend on maintenance, minimize the amount of money they spend on capital, not because they are bad people but because there is no choice. Is that what you are telling us here today?

Mr Hissey: It is not what I said, but I certainly agree that that is what they would do. I entirely agree with that.

The Chair: Very good. Gentlemen, thank you for your presentation. We appreciate your coming before the committee.


The Chair: The next witness is Richpark Investments Ltd, Evelyn Parker. We will be following the same procedure. You have 15 minutes for your presentation and you can withhold some time for questions and answers. Please have a seat. Make yourself comfortable. You have the floor.

Mrs Parker: Ladies and gentlemen, thanks for allowing me to make some comments today.

The present government has held so many hearings and I have been to several. I have listened to a lot of the comments and I have listened to a lot of the problems that have been told to the government that the landlords are experiencing, and yet they have done nothing about it. They have not even acknowledged that there are any problems; in fact, when you speak to them, they say, "Oh, there is no problem. Landlords do not have problems"; but they do. Until the government recognizes this, everybody is going to have a problem, especially the future housing industry in Toronto and Ontario. It is going to be in extreme difficulties if they do not soon recognize that there are a lot of problems. The problems are not being recognized; they are not trying to do anything about them.

It is also notable that a lot of these landlords are senior citizens. Many of them are senior citizens who have saved up money in their life while they have worked. Most of them have been people who worked, like myself. They have not been on welfare. They have not been on unemployment pay. I have never collected any in my life. They have worked hard and saved up money and invested it. Now they are being penalized for what they did. It is a very controversial law. But instead of getting any understanding from the present government, we are being told to live with it.

This is what we have to look forward to with Bill 121. You cannot sell your property. There are no buyers. Nobody is investing in Ontario now. We tried to sell our buildings. Nobody wants to buy them. After 16 years of inadequate allowances for repairs, there is nothing left to cover major expenditures that can happen in the future. There is absolutely nothing there, a fact which the government stubbornly refuses to acknowledge.

The rules are ever-increasing and ever-onerous. The paperwork is doubling every day. They said they were going to get rid of some of this paperwork and make it simpler. It is getting more complicated. It has not gotten simpler at all. If you have a neurotic tenant, he can call the municipality and get you into a whole hornet's nest of problems for no reason whatsoever. But it is all followed up with paperwork, and you have to deal with the paperwork that can take up to three or four months to clear because of somebody who is a little bit mental. We have gone through this, so I know what I am talking about.

We also have to look forward to paying GST. We have been given absolutely no allowance for GST, and yet we have to pay it. Everybody else can claim it back, but a landlord, no. We cannot claim it back.

If your building is smaller than seven units you get a bigger increase. Why? It is not logical that it is cheaper to run six units than to run seven or eight or 12. It costs the same amount of money to run. There is absolutely no difference in running, whatever size. The same cost is there. The GST is the same whatever.

My father taught me a very important lesson which I have remembered all my life. I found it invaluable in my experience, and to quote him, he always taught me to learn as much as I could, to work as hard as I could and to do the best I could, but to know my limitations. If you do not understand a job and you do not have the ability, then leave it to someone else. That is the best advice I could give this government. They are not doing that. I can only see failure in the present direction, particularly Bill 4 and Bill 121. They are both disgusting.

I would therefore request that before it is too late, some thought be given to some responsible and unbiased representatives of the present government spending some time gaining knowledge and a better understanding of the operation of the rental apartment industry, because I do not think they know anything about it. I think they owe this to the senior citizens of this province, and would like to request that the minister responsible for senior citizens' affairs be advised of my request, and that also the minister for seniors should look into the possibility of having the government held responsible for purchasing buildings when the owner cannot sell it and is no longer able to carry the burden of responsibility now imposed by the present government.

There should be equal protection for all citizens of this province, whether they happen to be in one category or another. A senior should have equal rights to any person, whether he is a tenant or not.

What is a tenant, anyway? A tenant can be anybody. There are many tenants who do not need any help from the government, and there are many landlords who do not deserve or need government interference in their operation. I have never needed it personally. I have always looked after my tenants. I have never gouged them or whatever you call these things. The government would be better occupied and would waste far less of the taxpayers' money if it subsidized the people who need help and let the law stop any tenant abuse that could happen, because that is what the law is there for. This way, they could run the province and save a lot of money and stop harassing landlords the way they are.

Another point of considerable neglect on the part of the ministry is the cases still waiting for decisions from rent review. We are still waiting for a decision for December 1989, for which there is no reason for a delay. The work covered by this application was done in 1988. We are approaching the fourth year of waiting, and this is simply not an acceptable or justified situation. It is time for the Ministry of Housing to face reality. The above situation is not warranted or excusable, and I would ask at this time that the ministry either put through a decision on these orders it is holding or issue a very good reason why it is not putting through a decision. We have heard nothing. We do not know what is going on. We never heard anything about whether they are going to consider the application or they are going to throw it out or what. This should not be. It is a disgusting situation. The time is long overdue that these backlog cases should have already been dealt with and put through.

That is my closing remark. I think it is time that the government faced reality.


Ms Poole: Mrs Parker, you have made a number of points which are not only well taken, I think they are also common sense.

One of the things you mentioned was the fact that you do not understand why the government has this difference between smaller and larger buildings when it is considering the guideline, that it costs as much to operate a small building as a large one, and vice versa. We have had that same evidence from a number of people who have come before our committee. Would it make more sense to you, if they were going to have two guidelines, which I am not sure you need, but if they are bent on having two, to have them for older and newer buildings? We have also heard people say it costs a lot more if they have an older building. There is more repair work, and there should be a better allowance for that type of building. Could you give us your comments on that?

Mrs Parker: Yes. that would make more sense. On the other hand, there are no new buildings, so I do not think it is really necessary. There is nothing really that is very new. I have owned my building since 1971. It was new then, but it is 20 years old now. The older a building gets, the more it costs to maintain it. That is quite true. Perhaps something could be done for the age of a building to allow it more money, because it certainly needs more money.

But no two buildings are alike. If you know this industry at all, you know that every building is like a person. It is an individual thing on its own, and no two buildings run the same. You can have two buildings that are built identically, side by side, and are totally different operations to run. It is a funny thing about the industry, but we have always believed that a building had a soul and had its own special characteristics. The government is killing that. There is no soul left in these buildings.

Mr Mammoliti: Ma'am, I agree with you on one point, and that is that the backlog is disgusting. I want to make it clear that it is the previous piece of legislation, the Liberal legislation, that allowed this to happen, and that is what we are trying to change here. We are hoping that our piece of legislation will expedite things at that level and will improve things as well. But when you talk about our piece of legislation, what we are doing, ma'am, is trying to find a middle ground for landlords and tenants. We found in the past that the tenants have been neglected, and we are trying to find a middle ground here. That is why it is important to hear you out as a landlord, as well as the tenants, so that we can make some suggestions through the committee to find that middle ground.

Mrs Parker: I think you should have more grounds for saying that tenants have been neglected. I do not think that is a fair statement. Maybe a few tenants were neglected in some buildings, but I do not think, on a general principle, that statement is correct. I think you are totally out of line in saying it. I resent that statement personally.

Mr Mammoliti: Do you?

Mrs Parker: Yes, very much.

Mr Tilson: I agree that the government probably has no idea of the far-reaching implications of this legislation on all aspects of the housing industry, but you have painted a number of issues that a number of people have made to these hearings. Could you tell me what you perceive will happen to the housing industry, people like yourself, if this type of antibusiness trend continues by the government?

Mrs Parker: I think you are just going to lose everything you have saved up for all your life. I cannot see any future in it at all for anybody. The tenants are going to suffer too. If you have not got the money to do maintenance, it does not matter if they put you in jail; you still cannot do it. It is ridiculous to say they are going to enforce maintenance if the person cannot get a loan from the bank and does not have the money to do it. They cannot do it, and nothing in this world is going to make them do it. There is no answer to that question, really.

The Chair: The next witness was Lighthouse Community Centre, Peter Harrington. Mr Harrington is not here.


The Chair: We will move to Valiant Property Management. Sir, the committee has allocated 15 minutes for your presentation. For the record, we would like all the presenters identified for Hansard as you are making your presentation, and you could withhold some time for questions and answers if you wish.

Mr Hann: Thank you, Mr Chairman, members of the committee. I think our timing is perfect. We just walked in the room. My name is Bob Hann. I am president of Valiant Property Management and with me today are my daughters, Debbie Clarke and Beth Kelly. We are here about Bill 121. I thank you for the opportunity to try to help you with the housing problem. I do not envy your task. I may have an advantage over many members inasmuch as I have experienced being poor as well as being better off. I have had an appreciation for those who are struggling because I can remember when my family was on pogey. I can also understand the business point of view.

My family have been tradesmen or builders working in the southern Ontario area since 1923. We started building rental apartments in 1957 and built the last one in 1972. We stopped because of the threat of rent control. We still own and manage those buildings. We do not buy or sell, nor do we flip apartment buildings. Just as a tradesman is worth his hire, I believe it is only fair to also acknowledge that a landlord is worth his hire. I have been both, and believe me, the 24-hour-a-day responsibility of a landlord is much more difficult than when I was practising my trade.

I am very disturbed by the retroactivity of Bill 4. We acted in absolutely good faith in following the intent and letter of the existing rules, only to be caught by that unfair legislation. It may be a poor example, but how would you like it if suddenly you, as a politician, were turfed out because to stay the rules were changed and you had to have 50% in a three-way race?

I wish to remind you of Bob Rae's message on the platform the night of the election when, in spite of the euphoric heat of the victory he said, "We will govern for all the people of Ontario," and later he also said, "We will be fair." I got a great deal of comfort out of those statements. I felt he passed the first trial of triumph. Bill 4 broke the bubble for me and now I agree with our Chinese friends who hate the number 4. Even Bill 121 adds up to four, and I believe this is the fourth major piece of legislation to deal with rent control. Quite frankly, with all the changes, rules, regulations and interpretations, I am burned right out trying to understand the rules governing my business.

You should also be aware that it is so complex, we often get differing advice from rent control offices on the same subject. It is quite understandable that the Minister of Housing made an incorrect statement to the Legislature with respect to the capital cost recovery rules. Our buildings are between 19 and 34 years old and we regularly do one or two roof replacements per year. However, after getting caught by Bill 4, I am not going to do any more major capital works until I am treated fairly. It does not make sense physically or businesswise for us to keep doing those $2,000 and $3,000 and $4,000 patchwork jobs, retubing a boiler or patching a roof or a parking lot. Those things all have a set life and we regularly try to do patching to make them last an extra few years, but for tenant comfort and convenience they should then be replaced. Unfortunately, there is a disincentive to do the job right.


As I understand Bill 121, an owner has to prove he spent 5% of the rents to allow a 3% increase above guidelines. This is the same as or tantamount to saying, "Don't do the work properly." My office is in one of our apartment buildings. I talk to many of the tenants and I see some of our tenants socially. I know that the vast majority want and can afford the $20 to $25 per month increase over the guidelines that would allow us to give them a better level of service. Special arrangements, both governmental and private, can be made for the small number of people who cannot afford that. But to continue to underserve the 90% to 95% who want a new roof over their heads or who want to stop the salt and rust from coming through the slabs and dripping on their cars just does not make sense. It is the height of folly to make a rule for a tiny minority and kiss off the majority.

Much of the mistrust of politicians and our system is because our tenants know they are suffering from rent control. It may be a love-hate relationship, in that they love the low prices of apartment rents but they hate their poorly maintained homes, but I can assure you they despise the rent control system that has evolved. If you do not give an owner some incentive, we will see far worse housing conditions than any so far. I will try to offer a solution after I have discussed the guideline figures.

First, I want to thank you for the continuing cost pass-through philosophy. Anyone suggesting that costs of operation do not rise is simply not in the real world. I sympathize with those people who unfortunately do not receive an increase in income to make up for rising costs, but it will be counterproductive to force the rental housing industry to try to compensate them. That is a separate welfare assistance problem.

The guideline figures are expected to compensate an owner for his extra costs. I assure you they have not done so. For instance, each two-year period of a three-year municipal term we get tax increases of about 12%, and the election year increases are 6% or 7%. Taxes are our biggest operating cost. So our biggest item of cost is going up roughly double the allowance two out of three years. The treadmill of rising prices is running faster and faster on us. We cannot keep up but we have no choice. We have to pay the taxes and other increased operating costs.

To cure that problem the drafters of Bill 121 put in a provision for recovery for extraordinary operating costs, and I thank them for this. Unfortunately, it is set up in such a way that it does not get triggered. We did a run-through on the arithmetic and find the method in Bill 121 does not allow this extraordinary hike in costs to be usable. Basically, this is because of the requirement that all operating costs are lumped and then must be 50% above the previous year. We will be whipsawed by this. For instance, last year our taxes went up 12.3% in Oshawa. This year, an election year, they are up 7%. This year we have had most of our operating costs subject to the GST, so you can see that again this year we will have large increases but we will not be able to make a claim. Next year we will probably be hit with high electrical rates.

Please remember these extraordinary operating costs increases are also subject to the 3% cap. If I have a 12.3% increase in taxes, a 10% or 12% increase in electrical rates and put in a new boiler, all I can get is the 3% over guidelines. Since I have to pay taxes and electricity I cannot afford to do the roof. It may be considerably cheaper to leave one or two top-floor suites or even all of them on the top floor vacant and do a cheap interior tarpaper roof on the floor, so that whatever leaks in the roof is gathered and piped away. If we are forced into this ridiculous situation, there go more suites that cost people about $475 per month that were lost for about $25 per month. These suites have to be replaced with government-funded and subsidized suites that cost you and me anywhere from $1,500 to $2,663 per month.

Surely it makes sense to drop the 50% over and lumping requirements, so that a huge increase in operating costs can be passed through even it is dampened by, say, a moving average over two years. There could still be a maximum, but if it is more closely related to realism an owner might be able to survive.

In conclusion, I suggest the following:

Recognize that major capital items need replacing. Create an incentive for the landlord whereby he can get his costs back. I estimate this to be 4% to 5% of rents. Or allow what the Minister of Housing told the Legislature, "A capital expenditure which would generate an increase of 5% above guidelines under the old rules would now be passed through at 3% the first year and 2% the second."

Recognize that the guideline increases are not fine-tuned enough. They should reflect the reality of our biggest costs of operation. Again, I feel a small upward tick of the Bill 121 figures will help alleviate most landlords from falling too far behind. My best guess is what I am suggesting will not exceed 9% for guideline and capital cost expenditures. Of course, this increase would only be after a major expense took place and was proven. It would drop back to the guideline figure for subsequent years. Further, what would be wrong if the total proven rent increase exceeded 9%, then there would be a carryover just as the minister said in the House: The cap could be phased in over two years or more. For instance, if the roof or boiler or garage slab repair was proven to be 6%, there would be a 3% for two years plus the guideline figure.

I have three more quick points to make. First, there are numerous other items in Bill 121 that seriously harm our business. I have only hit on the ones I can quickly address. Second, I commend you for the five-year exemption for new buildings. However, because it will probably take a year or more for rent-up and at least five years before I reach the break-even point, I will not be building new rental apartments. I suggest that if it were 10 years from, say, 90% occupancy with some form of absolute guarantee, this may very well be of interest to builders such as myself.

Finally, I want to explain my feeling about this government, which is reflected in this committee. Just as I need tenants and truck drivers, surveyors and superintendents, garbagemen and government, for my management and new construction I am also needed. I hope you recognize that and that during the committee consideration you will some time put aside the bias that each one of us wakes up with every single morning of our lives and make decisions we can all survive on. I pray that your considerations are made wisely and fairly. Thank you for your attention.

Mr Duignan: Would you, for example, like to see the whole question of taxes separated out of the rent and the question of tax increases dealt with separately from a rent increase?

Mr Hann: I do not know exactly what you mean. I guess what I am saying sir, is that as long as it is realistic, in other words, as long as it reflects what actually happens to our costs, that is fine. One caveat is, "Please simplify it." We are spending so much time on trying to understand this legislation, and if we are trying to understand and spending so much time, just think of the people and the abilities of the people being wasted who are having to drop it. I mean, it is mind-boggling. I cannot believe how complicated it is. If it is complicated, it leads to a lot of unknowns. As you know, anything that is unknown businesswise is a real downer. It creates a real downer. Any unknown that we have to operate on making --

The Chair: Thank you very much, sir.

Mr Tilson: Yes, anticipating that, perhaps I could rephrase it. I do not know whether you have had a chance to look at some of the other rent controls in other jurisdictions such as the United States. Looking at other jurisdictions, what, if any, do you expect will be the relationship between the landlord and tenant as the result of this legislation?

Mr Hann: It is unfortunate that this legislation has led us into the position of being at loggerheads with our tenants. In our operation, by the way, I try not to call them tenants. I try to call them residents and I try to refer to myself as an owner. But apart from that, we seem to be at loggerheads and the people in between are the rent control people, so you have three fights going on: owner, resident, generic-term politician.

It is bad because, as any of you know, your customer is the most important thing you have, and right now we are fighting instead of co-operating and doing a good job for our residents. With respect to the other areas of jurisdiction, rent control has always led to terrible conditions and destruction of the industry.

Mr Brown: You did not really mention in your brief what types of buildings you had. I presume you have some smaller units and some larger ones, some less than six units in a building and some buildings with more. The reason I am asking that question is because there is a differentiation within the bill as to size of building.

Mr Hann: No, we have no buildings that small. Our smallest building is 21 suites.

Mr Brown: You own a number of buildings, though. Could you tell me if there is a relationship between the number of units and the kind of costs you might incur per year? The government is telling us that smaller buildings cost more to operate than bigger buildings.

Mr Hann: I do not know, because a strange part about it is that our smaller buildings that were built years ago with -- for instance, we have a 21-suite building that has never had a roof replaced. The reason for that is that the material that was used on that roof was before they were cracking the asphalt so far down to try and sneak out -- do you want me to stop?

The Chair: Time has expired.

Mr Hann: I do not know what you want. If you ask a complicated question, I have to --

The Chair: We are trying to do it all in 15 minutes. That is the difficulty, Mr Hann. Thank you for your presentation today.

Has Mr Peter Harrington arrived? No.



The Chair: Beyond the Living Room Committee, Mr Howard Brown. Mr Brown, you have been here before. I think you know how the committee works.

Mr Brown: Mr Mancini, it is a pleasure to be back.

The Chair: You have 15 minutes and you can retain some time for questions and answers if you wish.

Mr Brown: Mr Chair, members of the committee, ladies and gentlemen, my name is Howard Brown. I am pleased to be presenting this paper on behalf of the Beyond the Living Room Committee. We are a coalition of private and public sector tenants and home owners. My presentation will take about seven minutes; then I will be open to your questions.

Our volunteer group was formed just over a year ago to monitor affordable housing policy, particularly in the city of Toronto. Since then, we have made over 20 presentations before government bodies in hopes of bringing greater democracy and accountability to the affordable housing front.

We have come before you today to express our concerns about the current legislation you are reviewing, Bill 121. The three specific issues we want to cover are: (1) the scope of future rent increases; (2) the enforcement of building maintenance; and (3) the types of units covered by the legislation.

Future rent increases: We are pleased that the proposed new legislation will address some of the previous abuses in the old rent review system. For example, we are pleased that tenants will no longer have to pay for financing the sale of apartment buildings or pay 30% or more, often retroactive, rent increases in one year.

However, while this new legislation seems to be better than previous attempts, we want to raise specific concerns to make it more effective. As the goals of the legislation are "to provide better protection to tenants from high rent increases and to ensure maintenance of existing rental housing," we feel these suggestions will do that.

We are concerned that this legislation will result in annual 7% to 8% rent increases year after year. With the 3% option added to the basic guideline, which already includes a 2% allowance for capital expenditures, many tenants will have difficulty meeting this major expense in their household budget.

One 90-year-old woman who lives in an apartment at Yonge and Eglinton asked me on Friday, "What is the use of having a rent control board" -- as she called it -- "if they do not control the rent?" She was deeply concerned about what this new legislation would do for her ability to stay, as she probably does, in her own apartment.

We are also concerned that tenants will not have adequate understanding of the complex nature of the rules. This whole procedure was set up to make the system simpler. I was interested to hear the gentleman before me making that exact point. For a tenant going through rent review for the first time, tenants need reasons for the rent increase decisions and should receive them automatically in clear, simple language.

A 15-day appeal procedure is totally inadequate for tenants to secure appropriate legal counsel on the best way to deal with their choices. An appeal to Divisional Court on questions of law is equally inadequate.

There is already significant confusion over the proposed two guidelines, one for buildings over six units and one for six or under. Tenants are familiar with the one guideline per year and the two different guidelines will do nothing to make the system simpler.

Legislation should clarify how binding the decisions of pre-hearings are and whether further evidence will be allowed in the final administrative review of the rent officer. Legislation should allow specifically for Saturday and evening hearings, as well as tenant input at every level of the decision-making process.

I can tell you that there are countless tenants who have seen their incomes or their pensions or even their life savings eroded because they faced rent increases year after year under the old legislation that were just out of their reach. These people and others are afraid this new legislation will make all affordable housing in Ontario a thing of the past.

On maintenance, there is considerable tenant concern over the definition in the legislation for words like "neglect," "inadequate maintenance" or "major" in describing capital expenditures.

There are still no time limits on work orders. Many tenants throughout Ontario have faced landlords who ignore work orders on maintenance in their buildings. It seems city building inspectors do not have the power to ensure that landlords comply with the work orders.

Tenants who happen to occupy a building at a given moment in many cases end up paying for years of neglect. It is too bad the government has neglected the concept of building capital reserve funds to deal with this issue. Over 5,000 tenants completing the Ministry of Housing's own spring survey supported this concept. This was the best-liked of any of the options the ministry presented.

While we recognize the difficulty in setting up adequate reserve funds in buildings that are already 25 to 30 years old, at the same time we are disappointed the government did not at least set up a capital reserve fund requirement for new buildings.

The obvious answer to ensuring adequate maintenance is tougher enforcement, possibly through licensing, which we suggested previously to the minister, and expansion of the low-rise rehabilitation program.

We would encourage each of you to visit some of the apartments in places like St Jamestown, right down the street from here. You can see the deterioration of the buildings right from the outside. Or visit buildings in the Yonge-Eglinton or Yonge-Davisville area, one of the nicest neighbourhoods in Toronto, where one building today is literally, as one tenant said, "fraying at the edges," with walls and carpets badly damaged and hall lighting totally out between several floors.

As the Beyond the Living Room Committee is a group of public and private sector tenants and home owners, we want to express in the strongest terms our outrage that the government has refused to include its own housing under the terms it so vigorously defends. A number of our committee members are Cityhome tenants, which is the landlord for tenants in 7,000 units in the city of Toronto. We believe tenants in these units and buildings deserve the same protection as everybody else and should be included under this legislation.

In conclusion, there are certain issues that tenants and landlords do seem to agree on: (1) This legislation has to be simple, understandable, and should not create a larger bureaucracy; (2) This legislation has to have an adequate appeal process; (3) This legislation has to put government-owned housing under the same restrictions as privately owned dwellings.

There is no question that many tenants are deeply disappointed that this legislation was not limited, as expected, to one guideline per year, based on inflation. Tenants have enjoyed the relative calm of the last few months, where they have not had to worry about huge rent increases above the guideline. Let's now take the time to make this legislation right. The people of Ontario expect nothing less.

Ms Poole: Thank you very much for your excellent presentation today. I had a couple of questions. First of all, you mentioned that the right to a hearing under this legislation is inadequate. We had a presentation from OPSEU which suggested that the clause be amended to allow landlords and tenants to request a hearing at any time during the proceedings. Is that how you would like to see it amended, or do you have ideas of your own in that regard?

Mr Brown: I think our committee has tried to look at this whole bill to make it the least confrontational possible. I am familiar with the OPSEU presentation. I think their goal, as well as ours, was to find ways that we can actually negotiate directly between landlord and tenant to try to get some concerns expressed by tenants on the table or to get concerns expressed by landlords on the table. I think that having it at any time in the process would be a good suggestion. Our committee did not get into the detail of looking at that specifically, but I think our overall goal is to find any way that you can encourage the dialogue between landlord and tenant.


Ms Poole: Very good. The other question I had related to the enforcement of work orders. Am I to take it from your presentation that you think a major failing is the enforcement of the work orders at the municipal level?

Mr Brown: There is no question, in speaking with the president of a tenants' association last week whose building had the entry system taken out for several days, of the feeling of total frustration with the city, the province, whoever was responsible. The tenants did not know who was the problem. They just knew there was a problem. If it was the city building inspector who was not acting fast enough, if it was the landlord, whoever it was, there was a problem and they wanted it cleared up. But I think that is a key part of the problem.

Mr Duignan: Thank you very much for making your presentation here this afternoon. I too am concerned that this legislation should be simple, it should be understandable and basically it should not create a larger bureaucracy. We want to get away from the previous Liberal legislation, which made it totally not understandable and very complex.

You also talked about having an inadequate appeal process. Have you got a suggestion along that line of what it should be?

Mr Brown: I think the basic concerns tenants have, and I have heard it expressed by a number of tenant groups, is that it has to give tenants time to get a sense of what the ruling says. Obviously, a 15-day period to appeal is simply inadequate.

Our goal was to create some time so tenants could get together as a tenants' association, potentially with legal counsel, to get a better understanding of what are the issues here and what are their options. Our goal would be maybe a longer process, and I do not know if it would be 60 days or 90 days at a minimum, but clearly if you limit it to 15 days, large tenants' associations, which may have been inactive for years, just cannot turn on a dime and expect to be able to respond in an intelligent way, in some cases hire a lawyer or whatever is necessary to be able to give back to the government an informed opinion.

I think the suggestion made by Mrs Poole might be a good one, where there is a chance to come in and out of the process so that different information could be shared along the way and there would not be this deadline that is so frightening for tenants.

I know that in a building in my neighbourhood, in fact even in my own, where we faced a 27% rent increase just over a year ago, the tenants were told, yes, they could appeal it, but they were not sure how much it would cost to go through the legal process, they were not sure how much savings they would get, and the concern was, what are the pros and cons of making any kind of appeal?

Mr Tilson: Do you believe that the standard of maintenance and repair of the housing industry will be diminished as a result of this legislation?

Mr Brown: No. I think that hopefully, because there is no longer a requirement to prove a decrease in the maintenance, it may even improve it.

Mr Tilson: Where are the landlords going to get the money to do it?

Mr Brown: I think tenants feel very strongly that across the province of Ontario they pay $8 billion a year in rent and that they pay rent in good faith; they expect well-maintained, safe, secure buildings. I do not think that is a perfect situation for everybody, because where do you draw the line. But tenants down the line feel they pay rent expecting a minimum service.

Mr Tilson: I hope you are right.

Mr Brown: I hope I am too.

The Chair: Thank you, Mr Brown, for your presentation.

Has Peter Harrington arrived? Okay, that will be the last call for Peter Harrington.


The Chair: Sydney Steinman is next. Mr Steinman, you also have 15 minutes. You can reserve some time for questions and answers if you wish. We would like you to identify yourself and any organization you represent for the record.

Mr Steinman: My name is Sydney Steinman. I am appearing here before the honourable members as a concerned citizen and I do not represent any organization.

Honourable members, the Rent Control Act will set out a system to control rent increases. In most cases, the landlord will be obligated to justify the extra costs for which an increase is requested at a rent control hearing, at which time the tenant shall have the right to dispute them.

It is to be hoped that the final legislation of the Rent Control Act will eliminate many of the problems now existing, such as shortening the long delays, prejudicial to both tenants and landlords.

Tenants usually know only property managers or building supers, having no contact with the actual landlord. There are bad landlords. There are also bad tenants. It is difficult for most tenants to formulate an affirmative opinion of their landlord, who almost never consults with them with regard to the administration of the buildings in which they reside. Many buildings are left in need of repair, sometimes more apparent than necessary. Tenants far too often have seen landlords act only in cases of urgent repairs, and many times to avoid legal action.

It is also a fact there are bad tenants, who purposely cause problems that are costly to the landlord.

For the most part, however, landlords are business people seeking a good honest return on their investment. For the most part, also, tenants would be willing to pay increased rents, if they felt these to be justified.

It is not surprising that applications for rent increases are usually met with anger, misunderstanding and essentially worry by tenants fearful they will not be able to afford such an increase and will face moves that, more often than not, prove disruptive to family life -- uprooting children from familiar surroundings, friends, schools -- and cause, in many cases, severe financial strain.

It would be wrong to assume all applications for increase are not justified in whole or in part. Many are, but landlords or their agents fail to convey this to the tenant, who usually learns of the requested increase by a notice taped to the front door so as to comply with the requirements of notification. It is not surprising the tenant reacts with animosity and frustration.

The period the parties are required to wait for the procedures that will finally determine if and how much rent will be increased increases tensions between the parties, who have in many cases had a hearing, a decision and possibly an appeal.

Landlords are all too quick to execute, which the present law allows, when they receive notification of an order under section 36 of the present act, and a tenant, unaware that a decision has been rendered for the payment of money, finds out when a sheriff's officer comes knocking at the door. Even when settled, tensions between landlord and tenant continue because of the inherent defects in the process.

There has to be, and there is, a better way. ADR, or alternative dispute resolution, has been sweeping Canada and the USA, gaining favour because of elimination of delays, its non-adversarial process and much lower cost. Conflict can and does cost money, wastes time, increases tensions, whether the dispute be between landlord and tenant, family members, consumers, merchants, etc.

Mediation is the first step in the dispute resolution process and the most important. It does not require lawyers, but the parties are usually free to seek them out if they so wish. It only needs the informal participation of the parties. Mediation is an informal, co-operative process where the issues will be discussed, options examined and the parties, guided by the mediator, work towards a settlement of the dispute. It is conducted at a mutually convenient time, with a telephone or face to face. The mediator may require the parties to provide information or documents to support their submissions.

Mediation is a no-risk process in which a neutral person helps the parties involved in a dispute negotiate their own settlement. The mediator encourages communication, assists in identifying the areas of disagreement, as well as agreement, and then works to bring the parties to a resolution. The strength of mediation is that it can be a natural extension of negotiations already attempted, but that have broken down.

Conflict between landlords and tenants can cost money, wastes time and most certainly increases tensions. Mediators manage conflict by reducing tension, improving communication and preparing people in conflict to negotiate with each other to achieve a positive solution to the problem between them.

I suggest that a mediation component should be part of this revised Rent Control Act, obligating the parties to sit down under the guidance of a government mediator to talk out the dispute, put their cards on the table so each party knows fully the problems of the other. This should be a prerequisite to any formal hearing by the ministry and could be similar to that now in operation with the Ontario Insurance Commission dispute resolution branch, which to date has been 75% successful.

I would urge you to examine this option and consider the benefits it would bring to both tenant and landlord.


Mr Tilson: Interesting. First time I have heard this put forward, sir. I guess my first question is, are you replacing one set of bureaucrats with another set of bureaucrats?

Mr Steinman: No, you are not, because of the neutrality of the mediator. What is happening is the landlord and the tenants sometimes, or most often, are completely unaware of why the increase has been requested. This gives the parties a chance to see each other for the first time and to talk face to face or under the guidance of a neutral government mediator who is completely neutral, unbiased, has no axe to grind. Settlement can certainly be brought quickly.

Mr Tilson: Do you have a paper elaborating on this? I would like to know, for example, who pays them, who trains them, who they are responsible to -- those sorts of questions. Have you a paper on it?

Mr Steinman: I do not, but I certainly can give you documents on this. If we take the Ontario Insurance Commission, they are government mediators, paid by the government. It is part of the process. When someone applies for no-fault insurance benefits at the present time and they have reason to go to the ADR process, immediately a mediator is named and sits down with the parties and, being neutral, brings the parties together, eliminates the tensions, and so far they have been 75% successful.

Mr Tilson: The government is supposed to be neutral.

Mr Steinman: If you look at it from one point, the mediators are working for and are paid under this process by the government, but what it does is it forces the parties immediately upon going the route of asking for a rent increase to sit down without any delay. Under the Insurance Act, the mediation process takes place immediately and must be terminated within 60 days, so that is part of the component. I can elaborate on it, but in 15 minutes I certainly do not have the time.

Mr Tilson: Yes. I obviously am pessimistic as to what you are saying, but I would be interested in hearing more about it. If you have a paper or documents available, I would be interested in seeing them.

Mr Steinman: I have documents, which I certainly will send in.

Mr Brown: I too am interested in your suggestion, and I would like to put another one to you. I have some reservations, like my colleague over here, as to who pays and how it works, and I would be interested, as he is, in your paper.

I look at another government model, though, in the field of labour relations and the field of health and safety in the workplace. There is a requirement in this province that there be committees formed of the employer and the employees that do not just look at it when there is a dispute; they constantly are monitoring the situation in the workplace. It seems to me that perhaps a model like that may work because government is not even involved in that model and therefore there is dialogue and consultation all the time. It is kind of forced that there is a dialogue and consultation, so sometimes the problems are resolved before they become disputes at all. I am interested in your comments.

Mr Steinman: That could very well work, but what it does is it takes away from the process where the landlord and the tenant sit down face to face to try to work out their particular problem. You must admit that under rent control the problem that exists between one particular landlord and a tenant may not be the problem that exists between another landlord and tenant.

Mr Brown: No, but this would be building-specific.

Mr Steinman: But the component, the whole idea of mediation, I believe -- that is why I am here -- works, and it is working throughout. Take for example rent control in Quebec. In Quebec, under the rent control act at the present time, all rent increases go in front of the registrateur or one of the people who hear these applications. It is completely less complicated, much less complicated than what we have here. A mediator or someone sits down with the parties. They try to do it in groups, where they get the parties, the landlords and tenants, together and they try to get all the points resolved, or at least only the points that are left go to a hearing. It works. What I am saying to you is that it is a component. Think about it, to be set up in any way you so wish.

Ms Harrington: Your proposal for mediation I think is a very important idea. It is important to the relationship between landlord and tenant. That is something we have been talking about, that the relationship has to be strengthened, that it has to have more of a balance. I believe that landlords want long-term, responsible tenants just as much as tenants want long-term, responsible landlords, so it has to work both ways.

What you are saying is something that I think would be needed also for long-term planning. We want landlords to do maintenance, upgrading and repairs every year on an ongoing basis, and this is something they have to consult tenants about.

Mr Winninger: Mr Steinman, your proposal for mediation is certainly a very compelling one. In virtually all levels of our court system, pre-trials are required and there is an immense saving in time and money. Even legal aid directors now are doing mediation to save money on legal aid certificates. I imagine what you are asking for here is a bump-up of the kind of informal discussion that landlords or tenants can ask for prior to the hearing to try to resolve the issues.

Just before you answer, my only concern is this: Tenants and landlords often come to these hearings with unequal bargaining power. Without the safeguards provided under the Statutory Powers Procedure Act, which are invoked at hearings, there might be some imbalance of power between the landlord and the tenant. I wonder, if you made this form of mediation compulsory, how you might address that concern.

Mr Steinman: I would ask you to take a look at the way it works in front of the Ontario Insurance Commission at the present time. You are correct that it is a form of bump-up, but the difference here is that if there is a mediation component in the act, it is obligatory. It means that as soon as there is a request for an increase and it goes to the Ministry of Housing, a mediator is named who sits down, calls the parties and says, "I will be talking to you within this delay."

The Chair: Thank you for your presentation. I am sorry, but the time has expired for your remarks.



The Chair: Eugenia Pearson representing Whyy Mee Family Counselling Foundation: You have been allotted 15 minutes for your presentation. You can reserve some time for questions and answers if you wish. We will turn the floor over to you.

Ms Pearson: On behalf of Whyy Mee Family Counselling Foundation of Metropolitan Toronto, we thank you for this opportunity to address you today and to provide you with our input from the community perspective on the proposed rent control legislation, Bill 121.

Whyy Mee is a community-based organization geared at family and individual counselling that gives support to members of the black community, with particular emphasis on the youth who come in conflict with the law. Our aim is to operate directly within the courts to give services before court appearances. We counsel and support families with housing problems, especially the elderly. We give support in court to revoke eviction notices for those who cannot afford to find a home within their income level, be it from their salaries or from social assistance. We provide assistance to anyone who identifies and needs our services.

It would have helped if there was sufficient time to present to you a brief on Bill 121 from the board. However, the unique position of providing you information from the floor is a benefit to your office based on experience and knowledge coming from the community.

The information and problem I bring from the community are twofold. First, many of our members in the community do not know what Bill 121 is, let alone understand its content. We applaud your effort for raising community consciousness. However, our first recommendation is for complete clarity about Bill 121 to the communities.

Next, what many of these people in the community know is lack of affordable housing, rent increases faster than their incomes, homelessness, disrepair and landlord-tenant abuse.

We take the position that if Bill 121 is to live up to the government's proposal to provide better housing protection from high rent increases and to ensure proper maintenance, you need more community involvement such as a community housing protection committee. The reason for this is because we can no longer rely on the guidelines and the goodwill of the bureaucracy to interpret and enforce the laws.

For example, some of the most disturbing areas that need to be addressed in order to make Bill 121 effective are enforcement and maintenance standards, the concept of what is considered maximum legal rent, and adequate proof of requirement as it applies to the guideline increases, among other things.

Take disrepair and enforcement of maintenance standards. The provincial guidelines must be enforced to be effective. There are too many flexibilities to its usage. It is the responsibility of government to ensure the best national or provincial services. Section 112 currently provides for the appointment of inspectors for the purposes of this act. We take the position that enforcement around the province is grossly inadequate and inconsistent towards the tenants.

You will find enclosed pictures of an apartment in one of the major residential areas in Metro Toronto. The tenant gets total abuse on requests for services. On two occasions an inspector was called. Orders were issued to the landlord for instant repair. At no time did the inspector return to check the job. The most recent is May 1991. These pictures attached to this report show that the work order was not totally respected. To date the inspector has not checked on his 15-day enforcement order.

The point is that Bill 121 provides for the landlord's claim of compliance to be observed by the province, but does not make the same provision for government response to tenant complaints of non-compliance. We ask that a community-based committee be put into place to ensure that the legislation is respected and that inspectors be given more responsibilities to check on work orders no later than four weeks after the notice is served, and with more powers to deal with non-compliance. The legislation should provide for a neutral and unbiased community committee to hear landlord and tenant cases.

Ms Harrington: I want to comment about your last suggestion of the community-based committee. I do not have it in front of me, but there are two thrusts in the new legislation in that direction. First of all, as was announced in June -- actually, it is not in this legislation, the first one -- by the Minister of Housing, we are giving some moneys to make sure there are advocacy groups that are funded with regard to housing. The name of the program escapes me at the moment. Also, in this legislation there is a suggestion for having an advisory committee to the minister on an ongoing basis dealing with this legislation. I think that is the type of thing you are asking for, but you maybe wanted more community-based in your own particular community here in Toronto.

Ms Pearson: Yes, definitely. I think we need more; not only a few agencies, we need more advocacy groups. The problem that I see and that I personally have experienced -- I am a long-time tenant and there are many more who are long-time tenants in apartments from 1970 and beyond -- is that whenever services are asked for, you get this song and dance starting from the superintendent and it goes on to the management. You cannot break through to the top guy because of the management barrier and you are not getting the service. If they are asked to come and inspect the building -- we say, "Come and see what it is we are talking about" -- we do not get that type of service.

Now if we had a group and said: "Come in and see what it is we are talking about. Let the landlord come and sit and talk with the tenants" -- many of the landlords do not face their tenants and do not speak to their tenants. They do not know what is going on. They give empowerment to their superintendent and to the management, and those are the people who are creating most of the abuses to the tenants. We cannot break through to them.

I think it is time for landlords to know who their tenants are, who are keeping their buildings, because we have an obligation as tenants and they also have an obligation as landlords. We do our best and they should do their best. We are paying our money. Be it as it may, whatever the rent is, we are still working hard for that money. We are paying it to them and we need a quality of service and a comfortable lifestyle in living in the apartments.

Ms Harrington: One of the main points of this legislation is more stringently enforced maintenance and maybe that will make landlords be at the building a little more often and see what is going on.

Ms Pearson: They should be told that they have a right to inspect the work.

Mr Duignan: Just following up very briefly on Margaret's comment about enforcement of building violations, under section 112 of this act inspectors can be appointed. Would you like, for example, the inspectors to liaise with the community groups and report to them and they would be part of that process as well?

Ms Pearson: Very good, yes, that would be a good idea. I think the inspector should come back and see if the work is done. There is the picture I showed you. The inspector sent in his order and they did part of the job. The paint job that you saw there, the stripping, is not done, has not been honoured, and the water is still dripping.

Mr Tilson: We have had landlords come to these hearings and simply say to us: "Because of this legislation, we will make no capital expenditures. We can't afford it. We will make very little maintenance improvement.

We can't afford it." Of course the answer is in this legislation, that the government will force them to deal with these issues they have presented to us. If the problem is as serious as the landlords say -- in other words, if they are serious about their threat, and I take it as a threat, that they will not do these things -- can the government possibly pay for this tremendous enforcement procedure that is going to be developed?

Ms Pearson: The next thing the government should do is to be on the tenants' side, to see to it that we do not pay our rent, because we are paying rent. Houses that are older than 20 years, sure enough, do not have overhead expenses. Many of the apartments are bringing to the rent increase board a huge repair bill and the only thing I see some of them do is paint the garage and that is the bill they bring forward. They must be able to provide the government with satisfactory bills stating that the work has been done and prove to the tenants that the work has been done.

Mr Tilson: You have indicated that you come from a counselling organization. You look at the issue of homelessness. You see homelessness all the time. You look at the problem that people simply cannot afford where they are going to be staying, and on it goes. My question to you is, is that a social problem in the same way that people cannot afford food or are not being fed properly or young children are not being fed properly or are not being clothed properly and indeed are not being housed properly?

You could tell me stories that would make my hair curl, I am sure. It is getting curly as it is. Is the type of situation you are describing more of a social problem as opposed to a housing problem?

Ms Pearson: I think it is both, but one is greater than the other. It is a social problem, because many of the people are having salary disparity. It is not the fact that some people are not qualified. Unfortunately they do not get a job that pays them well. They have to survive. Many of them have to protect their integrity. They do not want to go on social assistance, because it does not make it any better for them.

It is the same people's children who are having the problems, because they spend most of their time struggling to survive, most of them trying to find a place to live, and in the process their own children are disfranchised from the type of love and support that they are supposed to get. These are the same sort of children who are running afoul of the law, because they are left on their own and aggression takes place in between because they cannot cope; they do not know how to handle it.

Ms Poole: Welcome to the committee, Eugenia. We are glad to have your comments today. You work with young offenders on a daily basis and sometimes you are a counsellor and sometimes you are an advocate. I am sure sometimes you are a mediator who is trying to explain to the law what the young person's problem is and vice versa.

We had a presentation not too long before yours that talked about setting up a system of mediation between landlords and tenants. He felt a lot of the problem was lack of communication, that some of the problems could be remedied. Can you see that type of thing working or do you feel that the landlord-tenant situation is so hostile right now that there is no hope of mediation working?

Ms Pearson: No, I think there is hope. There is always hope for mediation. Once the landlord knows that he has been asked to face his tenants -- tenants do not have horns, for God's sake. What makes them very angry is that they never see who they are paying their money to and they see a superintendent who lies through his ears, because whatever he tells management and whatever management tells the owner, they take it.

That particular picture I showed you is a situation in point. It is over 20 years the tenant has lived in the building and the tenant is not doing anything wrong, is not destroying the building, not carrying on, is not blackguarding the building. It is a respectable tenant.

There is absolutely no reason, because the tenant knows his rights, why that person should be punished if that is the tenant who calls the inspector. If he says: "Fine, you won't do anything. I'll call the inspector," I do not think a person should be punished for knowing his rights, and this is what happens. They pay more attention to those who do not know their rights or those who are afraid, who say, "I cannot do it, because I have my dog and I have my cat." Therefore, they take anything that is given to them. The building is going down because these people are leaving the building because they want to protect their dogs and cats, while others who are paying their rent and are good tenants are suffering all this type of abuse.

The Vice-Chair: Thank you for appearing today.

Ms Pearson: It is a pleasure.

The Vice-Chair: The next presentation will be from Leo Hildebrandt. If Mr Hildebrandt is not here, we will hear, if they are here, from the 59 Spadina Road Tenants Association.

Mr Tilson: Very nice job, Mr Chair.

The Vice-Chair: I am doing very well. Is Allan Shiff here?

I think then it would be advisable -- we are a little ahead of schedule -- that we take a 15-minute adjournment. The committee will adjourn until 4 o'clock.

The committee recessed at 1545.


The Chair: The standing committee on general government is reconvened. Mr Leo Hildebrandt? Mr Darcy Keene? Mr Allan Shiff?

Mr Tilson: I assume these people have acknowledged to the clerk that they are coming.

The Chair: Yes, they are all officially on our schedule.

Mr Tilson: I know they are on the schedule, but have they acknowledged that they are coming?

The Chair: Yes. It is not unusual in the course of a full day to get one no-show, but to get one earlier on and apparently another now, with maybe another one to follow, is a little unusual. Are there any procedural matters the committee may wish to bring up at this time while we wait for Darcy Keene?

Mr Tilson: I had made a motion. I gave notice of motion some time ago with respect to someone from the appeal board coming to the committee and addressing the committee on comparing the appeal process now with the existing legislation and under the proposed legislation. I cannot find my notice of motion. Perhaps this would be an opportune time to bring that forward again.

The Chair: I think so. We are looking for it also.

Mr Tilson: The motion was that the members of the general government committee invite Mr Bob Bentley, Rent Review Hearings Board member of the northern region, to attend the hearings on Bill 121 and offer comments on the proposed rent control legislation.

The reason why this name was asked is that a member of my staff specifically spoke to Mr Bentley and requested whether he could offer any contribution to the committee from the hearings board perspective. He indicated that if he is given sufficient notice, he would be prepared to attend. I make that motion out of a genuine interest in the committee spending some time comparing the two systems.

We have spoken in the subcommittee and there was some concern about my mentioning a specific individual who is currently on the hearings board. I understand that concern, although judges speak their mind all the time. The Chief Justice of the Supreme Court of Canada as well as as, I believe, the Chief Justice of the Ontario Court of Appeal, are speaking their minds on matters of interest to the legal system, so it is not unusual.

The Chair: Are you making the motion now?

Mr Tilson: I have just made the motion, yes.

The Chair: Let's do it formally then. The motion has been made. We will entertain discussion on the motion. Mr Tilson, if you could make your full presentation to the committee now, we will call for other comments and then we will call the matter to a vote.

Mr Tilson: I really have nothing further to add other than the comments that I did make. Many of the questions that are coming forward from individuals speaking to this committee express a concern with the appeal procedure. To fully understand the existing system and to understand the system that is being proposed, I believe it would be useful for this committee to hear someone from within the appeals board, a hearing officer, to come and address this committee, giving his or her thoughts.

Mr Brown: We also would be most interested in hearing from people dealing with appeals. The issue has been brought forward by a number of presenters. Seeing as this bill is proposing a significant change to the way appeals are heard, I think an opinion of someone expert or knowledgeable in this area would be useful for the committee to hear. I am slightly concerned with a given name being put forward, but if this gentleman is agreeable, we have no problem with that. We would certainly like to see someone, whether it is the gentleman named in the motion or not, come forward and make a presentation. We will be supporting Mr Tilson's position.

Mr Abel: We have some concerns about having somebody, an appointee specifically from the public hearings board, being invited to speak. We are just not too sure how appropriate that would be, if that could be putting Mr Bentley or whoever is on the public hearings board into a difficult situation. I have a question. In Mr Tilson's motion, what type of information is he attempting to mine from Mr Bentley?

Mr Tilson: Dealing with your first point, as to the appropriateness of Mr Bentley, I have not spoken to him directly. My staff have. That very question was put forward to him, whether he would feel uncomfortable in his active position, and his response was that he would not.

I, as a member of this committee, and I hope all members of this committee, would like to be fully informed. We can read the sections and we can hear people, whether it be tenants' associations or landlords' associations, who have gone through the appeal process. There is a lot of criticism directed towards the existing process and the proposed process. I would like to hear all aspects of that process.

In answer to your question, before this committee makes its recommendation to the House or puts forward any form of amendment or debates any form of amendment, I would like to know as much about the subject as possible. That is an avenue we can learn from another perspective than someone who is actually on the board.

Ms Poole: The only concern I had about asking the person involved to appear before us was whether he was a willing witness and whether he felt comfortable with it. Mr Tilson has satisfied me in that regard. I was just about to say, "Call the question," but I would prefer if George left first.

Ms Harrington: Briefly, if there is any information that Mr Tilson or any other member of this committee needs, I am sure they will be able to get it directly from the ministry with regard to the hearings board.

Mr Tilson: In light of that comment, I ask for a recorded vote.

The Chair: Okay. I am just waiting for photocopies of your motion.

Mr Tilson: My last copy is gone.

The Chair: We have sent it out to be photocopied. As soon as we all have copies, we will call the vote. What I am going to do is, since I understand Darcy Keene is here is I am going to ask Mr Keene to come forward with his 15-minute presentation, and in between presentations we can take the vote on your motion, if that is agreeable to the entire committee. Very good.



The Chair: Mr Keene, the committee has allotted 15 minutes for your presentation. If you wish to hold some of your time for questions and answers, that will be your choice. I understand you are here representing 59 Spadina Road Tenants Association.

Mr Keene: As the Chairman stated, my name is Darcy Keene and I am here this afternoon to represent my group, that being the 59 Spadina Road Tenants Association. I would like to apologize in advance for the perhaps unsophisticated nature of my presentation. I am neither a member of any organized interest group nor a paid political lobbyist. I am just what I consider an average middle-class renter trying to find respectable accommodation in a rather hostile environment, that being Metropolitan Toronto. I would also like to note up front that the views I am about to express are the views of my association as a whole and not necessarily my own personal views.

With regard to the matter at hand, the legislation we are addressing, Bill 121, our association came to the conclusion that there were four major areas in which this legislation could potentially be critically flawed, and they are four areas we would like to see addressed in any modifications that are made to the legislation, or perhaps more specifically at the regulation stage, in terms of enforcement that goes along with the general issues presented in this legislation. The four areas where we saw attention being required were as follows: first, the nature of the annual allowable maximum increase that is given to landlords; second, the definition of what would be construed as "capital expenditures" under the legislation; third, the reactivation of the rent registry; fourth, for want of a better term, the use of the retroactive 10-year review "loophole" which is being allowed to landlords.

I will now address these four points in a little bit more detail. On the first issue, the annually allowed guaranteed maximum increase, it is our contention that whatever the maximum increase determined per year plus the addition of the potentially allowable 3% increase is an ineffective way of adequately controlling rents in Ontario. We propose that it would be more appropriate to set the annual increases strictly at the annual inflation rate for the given area. If you choose to separate it into the Toronto region, let's say, and the rest of Ontario because Toronto is subject to different economic constraints than the rest of the province, then that would be fine. However, the use of the potential additional 3% increase for landlords for extraordinary operating costs in and above the annual inflation rate is, in our opinion, nothing more than a benefit that has been given to landlords and their lobby groups to make them a little happier with the fact that rent control legislation is coming in.

From a business perspective we do not feel this is a very sensible way to allow landlords to run their business. In fact, we maintain that what it does is encourage landlords to deal with their businesses in a poor fashion. Because you are rewarding a landlord for neglecting his investment to the extent that you are giving him the opportunity to come up with additional expenses at the end of the year, you are actually encouraging him to deal with his investment badly so that he can come up with additional expenses at the end of the year to justify his additional 3%.

It is our opinion that any business person, landlord or otherwise, who has an investment takes the business at face value and has to make a profit out of it or not. Granted, you can give it an inflationary increase, but whether or not he makes a profit is his own business. Do not give him that additional 3% as a way out because he was a bad business person and came up with extra costs at the end of the year. There is no reason for that. No other business is given that additional way out. We would like to see the additional 3% lopped off the top.

The second point I addressed was the definition of "capital expenditures." In our personal situation, we are being faced with a package that has been presented to rent review whereby the landlord is attempting to justify a variety of capital expenditures he has engaged in over the last year.

The definition of "capital expenditures" is vague at best. In your précis it describes capital expenditures and it actually lists in the third line "maintaining and provision of plumbing, heating, mechanical, electrical, ventilation and air-conditioning systems." It is our contention that maintenance is not a capital expenditure, and this must be cleared up in the legislation.

Maintenance, in our opinion, is what we pay rent for. Time and time again when we have had these meetings, we ask, "What are we paying rent for if he is being allowed these additional expenditures?" We are faced with a 10-year review right now where the landlord is saying, "Look at the fact that I have purchased $10,000 worth of paint over the 10-year period from 1975 to 1985." Painting apartments is not a capital expenditure, even if it did amount to $10,000 over the course of 10 years; it is merely maintenance.

The third point we would like to address is the rent registry. It is our opinion that the rent registry, when it was initially implemented in 1986, did not work, and the way it is proposed to introduced it now in 1991 will also not work. The reason we feel it will not work is that it places the onus of proof and verification upon tenants themselves, and this is unreasonable.

If the ball is in the landlord's court, you are asking him to fill in a single form that says what rents he is receiving. In the verification procedure, you put the onus on the tenants to fill out a form they may or may not understand, return it to rent registry and say, "No, he is not charging the correct rent, and even if he is charging the correct rent, what he has listed on his form is not accurate." It is difficult to prove on the part of a tenant, because a tenant has no access to acceptable information. He cannot go back to the history of the building. He does not have access to the landlord's financial records.

The landlord has all the information available to him and he can submit whatever information he wants, but the tenant is the one who has to stand up and say to the rent registry: "No, this is not correct. This is not right." From a tenant's point of view, particularly a tenant who is perhaps not that familiar with the workings of the system, it is very difficult to prove.

The fourth point, the major point we wanted to address, is the allowance of the retroactive 10-year review. As I stated earlier, our building is presently faced with a 10-year review application to the rent review services. The landlord has come up with a package that consists of 10 years worth of -- I use the term again -- rather vague financial documents: cancelled cheques, invoices for the period from 1975 to 1985.

As tenants, most of whom have been in the building only the last couple of years, say from 1988 to the present, it is very difficult for us to go back and challenge the information presented by the landlord. How do we know if a cheque to some unnamed contractor was used on the building or not? How can we verify this information? We cannot. There is no access to the information. We cannot go back and contact a tenant who lived in the building from 1975 to 1985, because we have no record of who lived in the building during that period.

There is no onus put on the landlord to provide that information for the tenants. Consequently we are hamstrung when trying to respond to the information. All we can say time and time again is, "It looks a little vague to me," or, "This was not really a capital expenditure; it was maintenance." Consequently we are finding it very difficult to respond to this 10-year review.

Finally we do not think the landlord should be given this opportunity to justify what we consider to be nothing more than illegal rents. We have identified that he has been charging rents above the guideline, and yet this government is allowing him the opportunity to go back some 15 years and prove that these illegal rents were actually justified because he had all these additional expenditures. If he had these additional expenditures, why was he not doing something back in 1975 to 1985? It is our conclusion that this is a loophole the landlord can use to justify what is nothing other than illegal rents.

Those are the four areas our association would like to see addressed in the legislation, and before I take any questions from the people here, I would like to say, on a personal note, that I am not the kind of person who would ordinarily get involved in this sort of thing. I am just an average middle-class tenant in Toronto, but what really struck me when we formed our association was the number of people who came out of those units whom we had not seen in the previous year they had been living there.

They were people who were scared of what was happening to their homes. They were people who felt that enough was enough and wanted to do something about the fact that they were being held hostage by their landlord.

I have senior citizens on my floor. I have people who cannot speak English. They are scared of losing their homes. They are scared of receiving the 30% and 40% increases they have read about in the newspapers. The fact of the matter is they do not know where to turn. They do not have confidence that the bureaucracy will look after their interests.

All they have seen is that their rents go up every year. They have seen their services reduced, and they do not have a comfortable feeling that their homes, whether rented or not, are secure. That is a fairly scary feeling. I am in a situation where I have a choice, but a lot of people in my building do not, and those are the people I would like to feel I am representing here today.

That concludes my presentation. I hope it was not too vague. They are some of the issues that are sincere concerns on the part of the people in my association. I will take questions if you have any.


Ms Harrington: Thank you very much for coming. Your last point about stability and security is exactly why this government is involved in this matter. We believe these are people's homes.

You made the point about the maximum increase each year having to follow a certain guideline, and that going above it is simply justifying bad business decisions that people have made. That is a very interesting point, but I would like to show you that in the real world, and I believe it, we have gone as far as we can go, that we are doing as much as we possibly can for the rights of tenants.

I assure you that we are noting down all the suggestions you are making, as well as those from other people. I am trying to condense them into as short a list as possible to discuss with the minister and our staff regarding amendments to this bill. One thing you mentioned, the 10-year review loophole, is certainly a concern.

Mr Keene: Can you elaborate on that as a concern?

Ms Harrington: At this point I am afraid I cannot. Would anyone else like to speak?

Mr Tilson: Regarding the automatic inflationary increase you have suggested, as was indeed promised by the NDP in the last election, the principle of it was, of course, to cut down on bureaucracy. If you have an automatic increase, tenants would have a fair idea of where they are going, and you get rid of all that paperwork.

An automatic inflationary increase will not deal with a situation where there are buildings that do not warrant any increase. Everything may be the same from year to year. It will not deal with a situation that, for whatever reason, may warrant a decrease. It will not deal with the other side of the coin, a situation where rents may be too low; I am talking about the chronically depressed issue that I am sure you have heard debated. You may acknowledge it or not; the fact of the matter is it is there.

Why would we be giving increases, to take one example, to a landlord who does not need them?

Mr Keene: Your point is well taken, but it has been my experience, David, in this building and others I have lived in, that I have never seen a decrease in rent. I have never seen effective enforcement on the part of rent review services. I have only seen rents go up by the allowable maximum every year, year in, year out; that appears to be reality.

Tenants can complain until they are blue in the face about reduction in services, or getting a building inspector out to complain about building code violations. The fact of the matter is that the rent goes up 5.4% every single year, so the reality is that it is going to happen in 90% of the cases. Let us cut the bureaucracy and just give them inflation and that is it. Treat them like anybody else in society.

Ms Poole: Thank you for your presentation. I was quite interested in your comments about the rent registry in particular, your concern that the onus of proof is on the tenants to verify whether the maximum legal rent is correct.

Mr Keene: And the tools are not there.

Ms Poole: The tools are not there to enforce it. I would be very interested in your suggestions as to how you see it as workable without creating a big bureaucracy, without having a nightmare of paperwork. How do you see it working if the tenant does not have to verify?

Mr Keene: I have a few ideas on that subject, Dianne; thanks for asking. If you bear with me, one suggestion was that if you are going to put a piece of legislation or a regulation into effect, then there is a corresponding responsibility on the part of the government to make sure it is enforceable, to make sure it works, and I believe that.

I would suggest that if you are going to find out what the real rents should be, then you have to go back to the source. If that requires going to landlords and simply getting their cancelled cheques from units to find what they have paid over the last ten years, then maybe you should force landlords to open up their books and find out what kind of revenues they have been receiving from tenants, and compare the two.

They can complain about invasion of privacy as much as they want, but they are forced to do this for their income tax every year. They are forced legally to keep these records for a minimum of seven years. If you ask me, you would get a lot more accurate information that way than asking tenants to verify that the rent is legal and if it has been legal for the last 15 years or whatever.

That is one suggestion. The other suggestion I would make very quickly is that since hotels are required to post their legal nightly room rate -- say, $65 per night -- why not have landlords post what their legal rents are supposed to be in each and every unit, and make it a law?

The Chair: The committee wishes at this time to address a motion by Mr Tilson.

Mr Tilson: I have listened to some of the comments made specifically by the government members and I understand their concerns. Perhaps to alleviate some of those concerns I would propose an amendment to the resolution. I would delete the word "offer" in the second to last line and the entire last line and replace it with the words, "answer questions members may have".

The Chair: Since this was a friendly motion and since there seems to be no objection, why do we not have discussion on the amended motion and then we will call for the vote. Any further discussion on Mr Tilson's motion?

Mr Duignan: Just a point of clarification. Is this one motion or two?

The Chair: We are just voting on the second portion of the motion. We dealt with the first motion.

Mr Tilson moves that the members of the general government committee invite Mr Bob Bentley, Rent Review Hearings Board member of the northern region, to attend the hearings on Bill 121 and to answer questions members may have.

Mr Tilson: Mr Chairman, I did ask for a recorded vote.

The Chair: That is correct.


The committee divided on Mr Tilson's motion, which was negatived on the following vote:

Ayes -- 4

Brown, Poole, Sola, Tilson.

Nays -- 6

Abel, Duignan, Hansen, Harrington, Mammoliti, Winninger.

Ms Poole: I gather part of the concern of the government members is that Mr Bentley is currently employed or has an order-in-council appointment by the government and this might jeopardize his future impartiality in completing his work. Would it be acceptable to government members if we looked for a former Rent Review Hearings Board member who would be willing to appear before our committee and answer questions, just to get the hands-on information of people who have worked in the system?

The Chair: If the members are seeking any advice from the Chair, the only thing I would say is that we often have persons appointed by the government to answer questions before committees. The chairperson of the Workers' Compensation Board, who is appointed, comes before a committee; the Ombudsman, who is appointed, appears before a committee; the chairman of the Liquor Control Board of Ontario, who is appointed, can be called before a committee.

This is a question that individual committees themselves must decide. I think the matter has already been dealt with.

Ms Poole: I think the chair has made a good point and I really cannot quite comprehend why the government members are not supporting this. Apparently Mr Bentley is willing to come and it has been amended to say that it is just simply to answer questions. But if they have an objection simply because he is currently with the Rent Review Hearings Board, if that is their objection, I am trying to find a way around it.

The Chair: But we have already dealt with the motion. I do not think we can have another discussion on the motion that has been put forward and voted on unless there is a new motion by someone at present, which we cannot accept anyway because the allotted time has expired. Our next witness has appeared in the room and unless there is a notice of motion that committee members want to present at the present time or anything other than what we have already voted on, we are just going to move forward.

Mr Tilson: If we are allotting time I would accept Ms Harrington's proposal although I find it, with all due respect to her, unacceptable. But if that is the best we can have then I would like some sort of substantial presentation made by ministry officials explaining the two systems, by someone who would be informed enough to answer questions that members of this committee may have. If there is someone on the staff who feels he is competent enough to answer those questions -- a second or third best alternative; I am always prepared to consider second and third best alternatives -- I would find that useful.

Ms Poole: I just think that is a waste of time. I know staff is very knowledgeable, but that is not the purpose of this. At least my understanding is we wanted to get somebody who had actually worked in the field, who had dealt with appeals, who had dealt with actual cases to give his perspective on this legislation and ways in which we could improve it, or ways in which the legislation is strong, to support it. To go back to ministry staff who drafted this legislation and ask them for their comments is not quite going to do it. I would far prefer to go to a former Rent Review Hearings Board member and, Mr Chair, when time next allows, I will be bringing a motion to that affect.

Mr Mammoliti: I think that presenters over the past week have been experts. We have had a number of tenants associations that have represented their tenants at the board. They have given us all kinds of suggestions. We have also got landlords who have been to rent review and have given us all kinds of suggestions. With all due respect to that argument, I would say that we have already listened to a number of experts.

The Chair: Maybe I have been a little lenient all the way around. We have had a motion, an amendment and the vote. We are discussing something the committee has already decided, so my apologies, Mr Mammoliti. Unless there is something new, we are going to call a witness.


The Chair: Mr Shiff, the committee has allotted you 15 minutes for your presentation. You can withhold some time for questions and answers if you wish. We would ask you to identify yourself for the record and the floor is yours.

Mr Shiff: My name is Lorne Shiff. I work for Havenbrook Realty Co and Morray Investments, as I have noted here on this paper. You will notice that there is a "we" in here most of the time. I am referring to our company. I was also going to be accompanied by another person, but it is just myself.

Morray Investments and Havenbrook Realty have owned and managed apartment buildings in the Metropolitan Toronto area for over 30 years. We have some major concerns with Bill 121 and I will be able to touch briefly on those in this short period of time. I will talk specifically about two apartments buildings we own that are 25 years old and have 154 suites each. When I refer to my examples, I am talking about those buildings. They are located in North York in Metro Toronto.

Bill 121 states that landlords must spend 2% of the guideline increase each year on capital expenditures, with an additional increase of 3% above the guideline allowed for capital expenditures or extraordinary operating costs for a total of 5%. This represents approximately $50,000 worth of work for our two buildings. We currently spend a full 2% each year on capital expenditures for ongoing upkeep of the buildings. Therefore, in order to do necessary work beyond that of normal upkeep, the 3% or $30,000 would be the limit for the amount that could be spent.

Prior to the introduction of Bill 4, Havenbrook set a program in place for work to be done on the buildings ranging from new heat-circulating pumps to new stoves to a new security system, which was a specific request of the tenants. A disclosure notice was sent out and a meeting was held with the tenants' association to review the planned work. The tenants were in favour of having the work done.

Bill 121 as it reads will not give us the opportunity to provide the tenants with an upgraded security system or the majority of the other planned work. In our case, which is quite a typical one, $30,000 to $50,000 is not enough money to complete major projects. The result will be an increase in costs for doing such work. I refer to some figures here, and the figures represent $64,000 for a contract which was supposed to be let, a price we receive for doing asphalt and curb replacement work. In order to do this work under the present legislation, we have split that into two contracts for a total of $69,000, an increase in cost of $4,500.

Prior to putting our program of work together, we hired a consulting engineer firm to prepare a report detailing the work that should be done in order to maintain the building services at the same or better levels than they were for the first 25 years. This is one excerpt from that report:

"Each building has three booster pumps to ensure adequate water pressure on the upper floors of the building. In each case two pumps are original and one new replacement pump has been installed.

"The original pumps are beyond their normal life expectancy and should be replaced. We recommend that two new duplex booster pump sets be installed in each building with the third circulating pump retained as a back-up unit for emergency use."

The cost of this portion of the work is $28,000 alone. This represents one small portion of the mechanical and electrical work we were planning on doing.

It is clear that with a limit of 3% above the guidelines there is not enough money to do work properly and efficiently. Because 3% translates into such a small amount of money, we would make an application each and every year for that 3%. What that would mean would be a lot of work for the rent review offices, consultants and the landlord.

Bill 121 provides landlords with 30 days to rectify any work orders. This is an unrealistic time frame. For example, we received a work order to replace all our railings in the stairwells. It was a 30-day process to get pricing. Actual time to complete work was 90 days. From the time we received the work order to the time we issued a letter of completion was 145 days. The 30-day time frame is unrealistic. This bill does not address the right to appeal work orders. There must be some right to appeal. This system of rent penalties for outstanding work orders gives tenants an incentive to cause malicious damage to try and gain rent reductions.

Sections 113 and 114, duties of inspectors and search warrants, presents a great concern to us. We operate a business which should not be subject to interruptions by inspectors. These sections will give impetus to those tenant activists who presently look for ways to disrupt landlords' offices and employees. There are people who make a living by representing tenants trying to get rent reductions. These sections provide ideal vehicles for these people. Sections 113 and 114 must be removed.

In closing, I would ask the committee to carefully examine all the implications of Bill 121. It is important to examine the long-term effects of policy, and in this case Bill 121 does not look good. The aging rental housing stock in Ontario is in great need of continued repair and upgrading, and as it is written, Bill 121 does not allow for this to take place.

I thank you for your time and would be happy to answer any questions.


Mr Brown: Thank you for appearing. We heard from the chamber of commerce, which come before us first thing this afternoon. They really presented two scenarios. I asked another presenter about them and I said, "What are you going to do if given 121?" and the answer given was: "We're not going to do any repairs. We're not going to do any maintenance other than what we absolutely must do." You are giving me the chamber of commerce's B answer, which was: "We'll get 8% every year. We'll go out and do what it takes to get 8% and that's all we'll do, but we will do that every year." Did I understand you correctly?

Mr Shiff: That is what the bill will force us into doing; correct. The buildings are 25 years old. A building that is 25 years old needs a certain amount of work done to it. When these buildings were built, there was no rent review in place. If you were building a building today, you would put a pro forma together that tells you the rents you have to achieve if you are going to spend X number of dollars. Today, if I need to spend X number of dollars to keep those buildings in a certain state, and I would prefer they stay in a top-notch state, then I have to know I can achieve certain rents from that. Right now I cannot, unfortunately.

Mr Brown: So I can understand that you think you will do enough work to get the 8%.

Mr Shiff: Correct.

Mr Brown: Does that mean this is going to be more expensive to your company and hence to the tenants, because you are going to be doing the work based on a formula the government has imposed rather than a realistic formula that you would have chosen to keep the buildings in good shape.

Mr Shiff: The costs will go up because of that, yes.

Mr Winninger: I would like to focus, Mr Shiff, on another area of your submission, and it is this fixation that I have heard several times from landlords about this 30-day time period to rectify work orders.

Surely the landlords will understand that by the time the work order goes to the office of the ministry there has already been a reasonable and sufficient time limit allowed by the municipal inspectors. If that time limit proves to be unreasonable, and you have given a plausible example of that, surely the landlord should go back to the municipal inspector before the work order expires and let the inspector know that the time should be extended. This prevents landlords from blatantly ignoring the work orders issued by municipal officials, and by the time the 30-day period starts to run a reasonable amount of time has already expired to get that work done. I wonder if you could respond to that.

Mr Shiff: I agree, for example, for a painting area or a plastering area. I disagree for outside work and it is the dead of winter when work cannot be done. I understand that there is a concern that there must be some backup for work. If it is a year's period, no one will do it, or a lot of landlords will not do it; there will be no incentive. Unfortunately there are those landlords that are spoiling it for the rest.

If you leave it at one period for both major and minor, that is a difficult problem for landlords. Maybe, then, correct the smaller items; incidents like plaster repair, painting repair, should have the lesser time frame, but major work must have a longer time frame.

The Chair: Mr Mammoliti, because you have been so co-operative today, I am going to allow you one short question.

Mr Mammoliti: Thank you very much, Mr Chairman.


Mr Mammoliti: I do not want to take up my time here; I want to ask the question.

I am a little distraught at that. Landlords come in here and rant and rave when people say they have been abusing the system for years. When I say that, they say: "No, that's not true. We haven't. Only a handful have." Yet you are the third person to come in front of this committee and say that even though this legislation still is not in place, tenants will abuse and will break. I just find that a little contradictory, do you not?

Mr Shiff: No. I find there are good tenants and there are bad tenants and there are good landlords --

Mr Mammoliti: Then why did you make that statement?

Mr Shiff: Because if you take two examples --

The Chair: Thank you. Mr Tilson.

Mr Tilson: Over the next two or three years, in the planning for your building, do you have any specific plans for making capital expenditures or capital improvements to your building?

Mr Shiff: Yes, we do. Before Bill 4 was introduced we had a program set in place for a tremendous number of capital expenditures over a period of time which, as I said, were discussed with the tenants. The rent increases were discussed with the tenants and the tenants' association was in agreement and actually asked for a few more things.

Mr Tilson: Having seen Bill 121, do you still intend to proceed with those improvements?

Mr Shiff: I will be able to improve with a small number of them and only those that are very essential. We will not be able to improve with those that the tenants were requesting, such as a security system, because they are not at the top of the priority list as far as heating, ventilating, water and electrical systems are concerned.


The Chair: The next presentation is by the Ontario Coalition Against Poverty. We will be following the same procedure, 15 minutes. You can withhold some time for questions and answers. We need both of you to identify yourselves for the record.

Ms Hayes: My name is Marnie Hayes. I would also like to introduce Bonnie Briggs, who is a member of the Ontario Coalition Against Poverty. Before we get into the nitty-gritty of the legislation, Bonnie is going to introduce our organization.

Mrs Briggs: I am a member of OCAP, which is the Ontario Coalition Against Poverty. It is a province-wide organization of 50 grass-roots antipoverty organizations. We have worked to help try to eliminate hunger, homelessness and poverty, all of which I have experienced.

I have been homeless in the past and am presently living in poverty. My husband is between jobs right now. He just had a job interview today. I will find out tonight if he has a job. I am unemployed at the moment. I am involved in OCAP, as I said, plus a number of other antipoverty groups. I am not getting paid for what I do. I do not do it to get paid for it. A lot of our income goes for rent and we cannot afford big increases. I do not know if a lot of you people have ever experienced poverty or homelessness. We ask you not just to listen to the poor landlords, but to listen to the poor. Walk a mile in our shoes. I will turn you over to Marnie Hayes now.

Ms Hayes: Bonnie has been at Mulroneyville, the tent city that has been down there. More of those people would be here supporting us today, but they are down at tent city.

Before talking about Bill 121 itself, I just want to talk a little bit more about the housing crisis in Ontario and the fact that the majority of renters in Ontario live in market rental housing and do not live in subsidized housing. Also, the majority of poor people live in market rental housing. It is the position of OCAP that any rent increase above a raise in tenants' income is not affordable, and this legislation will erode the long-term affordability of rental units.

Within the framework Bill 121 is written in, and as it already includes a cost pass-through system, we will make our presentation based on that legislation. Our position is that the cost pass-through system will erode the affordability and that tenants cannot afford to pay rent increases above the guideline, above inflation every year. Within that we will make our presentation.


Looking to my written brief, we have pointed out that in the legislation there are two guideline increases, for the large buildings and the small buildings. It is our position that having two guideline increases is discriminatory to tenants who live in buildings of less than six units. It is our position that there should be only one guideline increase per year in order that tenants in smaller buildings are not discriminated against. We say that because there does not appear to be any evidence that in buildings with less than six units landlords have higher costs. There is no evidence of that. There are usually no superintendents in smaller buildings and there are usually no elevators. The costs to do things such as snow shovelling and groundskeeping are usually lower because the people who live there usually do those things. Before the bill passes, we would like to see concrete evidence to show that both guidelines are needed.

Also, with respect to smaller and larger buildings, in Bill 121 there is a carry-forward for a three-year period for smaller buildings. We believe that is unfair and unnecessary. With respect to carry-forwards in general, our position is that they should not exist, the reason being that carry-forwards allow for rent increases every year for two or three years, depending on the size of the building. That is unfair to tenants. We believe the landlord should have to reapply every year in order to get an increase.

Bill 121 appears to wipe out the moratorium on rent increases that Bill 4 gave to tenants, the relief that was given to tenants under Bill 4, and we strongly object to that. We believe the relief that was given to tenants under Bill 4 should be reinstated in Bill 121. It should be allowed for and tenants should have that temporary relief.

With respect to capital expenditures and the 3% cap, as mentioned, we disagree with cost pass-through as a principle. However, if there is pass-through, we believe landlords should have to prove they spent the 2% that is already existing in the guideline before they can apply for the 3%. Not only that; there is talk about the fact that landlords will not make any capital improvements if they do not get money for them. We submit that there is already money in the guideline. There was money in the previous guideline. There has been money there and there will be money there and that is where they should get their money from for capital improvements, the allowances. So they should have to prove that 2%.

In Bill 121, the definition of what is eligible under capital expenditures: We believe you should very stringently examine that in order to tighten them up and make sure that operating costs cannot be included in those capital expenditures.

With respect to costs no longer borne, if landlords pass through the cost of capital expenditures to the tenants, once those appliance costs or whatever have already been spent, those costs should automatically be removed from the rent, we believe; that is, costs no longer borne should be removed.

There is a provision in Bill 121 that allows for a landlord to go to the tenants and get the tenants' consent to make capital improvements in their units. We strongly object to that provision because we believe that could lead to abuse by landlords of vulnerable tenants whose language may not be English as a first language, or who may not be able to get a rental unit because the landlord may be looking for tenants with more money who would consent to capital expenditures being done in their units. We feel that is something that is discriminatory or could result in prejudice to low-income tenants. We recommend that be removed.

With respect to the maintenance provisions in Bill 121, we applaud the bill for its strong intention to try to ensure there is a rent freeze if maintenance standards are not complied with. We think that is a wonderful idea. However, our experience with municipalities across the province, in enforcing existing standards or where there are not existing standards, makes us feel you should investigate that part of the bill and really tighten it up to ensure that standards are enforced and that inspectors are put on the job, to go out and enforce standards or enforce provincial standards on municipal standards. We feel that is very important.

In addition, upon looking at the bill, you can see there may be some loopholes that allow for abuse of the particular maintenance provisions. For example, there is a stay on work orders if the landlord appeals the work orders. There is a lot of room for stalling the freeze on a rent increase. We ask that you investigate and tighten up those provisions.

With respect to the exemptions under the bill, we believe all units should be covered, including municipal and non-profit housing. Having worked with many tenants in municipal non-profit units in not-geared-to-income units, we see that tenants get rent increases they cannot afford. Municipal non-profits in Ottawa and Toronto, for example, are not particularly accountable to anybody and therefore should be covered under the act. The same goes for private non-profits.

Our position with respect to new buildings is that they should be covered under the act.

I guess we have four minutes left. With respect to rent registry, we submit that all units should be covered and that tenants, for example, Bonnie, in a one-unit or two-unit building, should be able to go to the rent registry and find out what their maximum legal rent is. All rents should be registered. As well, buildings with four, five and six units should be registered as of 1985 when the previous legislation was enforced.

With respect to the hearings and procedure in general, we believe that hearings should occur unless all parties agree to an administrative process, the reason being that tenants often receive landlords' applications. It is hard to organize, and it is hard to get organized, around whether there should be a hearing and whether they should apply for a hearing. If there is an automatic hearing, then that would allow for tenants to have their voices heard more fairly.

Finally, we ask that all the forms and procedures be simplified considerably under the act so that it is accessible to more people.

Mr Tilson: Thank you for your comments. The technical positions that you are putting forward I certainly find helpful. One area I do have some difficulty with is that an organization such as yours that is representing the poor, the unemployed, people who cannot afford increases -- I asked an individual earlier the same question and I ask you the same thing -- people cannot afford clothing, cannot afford food, certainly cannot afford housing, and yet your group -- or you; I do not know whether it is you or your group -- is advocating increases. Is that the way to solve what I submit is a social problem -- and you do have social problems, people who cannot afford anything.


Ms Hayes: You are saying that we are advocating what?

Mr Tilson: You appear to be advocating increases; in other words, automatic increases. You appear to be supporting that position.

Ms Hayes: I do not understand what you mean by automatic increases.

Mr Tilson: You appear to be supporting the position that has been put forward by the NDP in the past of an automatic increase in rent, unless I have misunderstood what you have presented.

Ms Hayes: No, I am saying that we are not disputing a guideline rent increase that a landlord could automatically impose each year, provided they give proper notice. We are not disputing that.

Mr Tilson: Why would you even agree to that when you know the problem is poverty?

The Chair: I wish I could let it go on, but I cannot.

Mr Brown: Your brief is I think very comprehensive and lays out your positions quite well. I would ask you, though, do you see the provisions of this bill, even if all the amendments you would like go through, as providing more affordable rental housing to the poor of Ontario two or three years down the road after it is implemented? Do you think that would occur? Do you think the choice would be there? Do you think that more people could be accommodated at a reasonable cost?

Ms Hayes: I think that rent control legislation is not necessarily aimed at producing more housing. I think that producing more housing is an absolute necessity, coupled with good, strong rent control legislation, for a policy that will house all the homeless and provide secure affordable housing for everyone.

If you are suggesting that if we eliminate this it would produce more housing, I say no to that, because we can look to BC and see where there is no rent control legislation at all and where no more housing has been produced. I think that the cost to produce housing is very high and I think that we have to look to government to look at spending more money on housing.

Mr Abel: I would first like to comment on the buttons you are wearing, which read, "Housing is a Right." I could not agree with you more.

My question is for Mrs Briggs. At one point you mentioned that you were rendered homeless. Would you mind sharing with the committee how that came about, briefly?

Mrs Briggs: Yes. In November 1986 our landlord informed us that he had sold the house. We did not find out until after the sale had been made. We were told we had from that November to the following March to find something, and we could not find anything. A lot of places either had long waiting lists or they would not take two people, my husband and I. They would take either him or me, but they would not take both of us.

Mr Abel: So in your opinion, according to your presentation, although Bill 121 is not quite perfect, do you feel it is a step in the right direction?

Mrs Briggs: I feel that 3% plus the guideline, which adds up to roughly 9% a year, is not appropriate at all. It is only going to result in more homeless people. There are thousands out there now who are homeless. We do not need any more.

The Chair: Thank you for your presentation this afternoon.


The Chair: Frank Marcoccia is next. Frank, we will follow the same procedure. There is 15 minutes for your presentation. You can withhold some time for questions and answers. We are running to a tight schedule. You have to speak into the microphone or Hansard will not be able to pick up your comments.

Mr Marcoccia: Thanks. I am a landlord and I would like to give a couple of examples of some properties that I own and how this bill will affect us and our tenants.

The Chair: You are representing yourself, no organization?

Mr Marcoccia: I am representing our family.

The Chair: Very good. Thank you.

Mr Marcoccia: Our first case is 22 Leopold Street, which is in the Parkdale area of Metropolitan Toronto. We purchased this property in July 1987. In 1988 we made an application for a rent increase above the guidelines.

As a direct consequence of Bill 4, I would like to point out that as of February 1, over $4,000 in phase-ins were wiped out because of Bill 4. This represents a financial loss out of my pocket.

I would also like to point out that this is only for the first year of operation of this property. I would also like to point out that since July 1987 we have made [inaudible] with this property. Also, last year, we undertook major capital expenditures on this property.

One of the purposes of this project was to go to rent review afterwards and get equalization for tenants 1 and 2. Because of our renovations, these are identical apartments. At this date, I would like to point out that tenant 1 is paying $1,235 in rent, while tenant 2 is paying just over $1,000 in rent for the identical apartment. I think this is a case for equalization.

This slide basically shows what we did. It is a beautiful building with beautiful apartments, and the tenants are very happy.

There is a second case. We recently purchased a property on St Clarens Avenue in the north Parkdale area. Just to give you some details of this acquisition, we purchased it in April 1990 at a cost of about $345,000. The average rent was about $320 a month, and all we paid was for hydro.

I would also like to add that the average tenancy is over 15 years, and some tenants have lived in this apartment for over 30 years. We had a business plan for this property. First was to increase the rents to cover our costs. We did that; we went to rent review and got our application number.

The second part was to rehabilitate the building, using any profits it generated [inaudible]. I would also like to point out that all our tenants were fully aware and in support of our business plan until Bill 4 came along.

After our first year, the closing balance on the financial loss for this property was over $18,000 as of April. I think this is a blatant disregard for losses. How far can you expect me to carry these losses?

I would also like to point out the consequences of this. I think the rule on capital increases is clearly unworkable. We are all aware of the 10% increase over two years. When I show you some photographs of the property, you will realize that this will come nowhere close to covering what is required for this building.

As other people have stressed, [inaudible] what happens in three years when [inaudible] operating costs are 55% of gross income, the GST is really taking another bite, and there is inflation and extraordinary operating costs, not to mention taxes, hydro, gas and so on.


These slides are not very clear so I will just go through them quickly. This is the property in question. It is unfortunate you cannot see this, but shortly after purchasing it we brought in a structural engineer to give us comments on the building, and the building is very solid. We want to upgrade the fire safety requirements. We will be lucky enough to do the roof. We would like to do some other things. We would like to retain the structural integrity of this building. I think this building could really be improved; however, without that assistance, I do not think it will last the next decade.

I would also like to point out that in the short term, we lose; in the long term, our parents will lose. I would just like to say that I think this legislation is oppressive, it is destructive to the industry and it is shortsighted. Thank you for your attention.

The Chair: Thank you for the first part of your presentation, Frank. We now have questions.

Mr Winninger: You used the word "oppressive," Mr Marcoccia. You described how these nine apartments were occupied by people of 15 or 20 years' tenure, paying approximately $320 a month, on average. Is it not oppressive to these tenants to have some new owners acquire this property, probably with considerable financing, and then pass that financing cost through to the tenants? You did mention you had a financing loss of $18,000.

Mr Marcoccia: No, that is a financial loss; it includes the financing and operating costs for the building.

Mr Winninger: Financing and operating costs, okay. You also estimate that your operating costs were running at about 55% of rents.

Mr Marcoccia: That was in the first year of operation.

Mr Winninger: When you purchased that building, you would have, of course, anticipated some increase in the capital value of the building, so that if you sold it, you would actually reap the gains.

Mr Marcoccia: Our goal was not to sell the building. Our goal was to maintain [inaudible] for the tenants who, supposedly, 10 or 20 years down the road --

Mr Winninger: Given that you can perform some capital work, and claim it, pass it through to the extent of the additional 3%, plus the 2% included in the guideline, there is no disincentive to you to complete the work that you planned to complete to ensure that the building can last a good many more years.

Mr Marcoccia: We consulted our tenants and they are in full favour of it.

Mr Tilson: On the subject of the transition period or the window that is suggested in section 16, dealing with the retroactive issue of items that are caught perhaps at Bill 4, I would like you to help me, because one of the areas that I see with respect to this section is that it does not assist individuals or owners who were caught doing work in 1989. It does not deal with that. In other words, it has to be after January 1, 1990.

Second, this whole issue of neglect comes forward. You could have followed the rules, done the work, and someone will come along and say, "Oh well, you did it, but it was neglect, and therefore you're not going to get it." Are there any other areas that you see in which this section is defective?

Mr Marcoccia: I have to agree with you. I think neglect is a problem, and that was the case in St Clarens previous to our ownership. We are not neglecting the building.

Mr Tilson: What do you mean? You mean as a result of previous owners there was neglect?

Mr Marcoccia: Yes, the previous owner owned the building since 1964, I believe, and he let it go; neglect.

Mr Tilson: So you bought it and have now done the work --

Mr Marcoccia: No, we have not done the work. We would like to do some work. We lost over $18,000 operating in the first year. To be honest with you, if the building were to collapse tomorrow, the lot would be worth more without the building than with the building.

Mr Tilson: In answer to your final question, Premier Bob intends to buy you out. That is what he is going to do.

Mr Marcoccia: Is that what he agreed? That is all right with me. He can have it.

Ms Poole: You have made a number of points quite graphically. You did make one statement that under Bill 121 there is clearly an unworkable limit on capital increases. Do you have any ideas you would like to share with us as to what you think would be workable?

Mr Marcoccia: I think in a case like this where work is obviously required, it should be increased slightly. The existing rules that were there were fine. You take the monthly expected capital expenditure -- for example, if you buy a new fridge. A fridge will last 10 years. It is the tenant that is getting the use of the fridge, not me.

Ms Poole: I was thinking more in line of the cap that has been proposed, which is 3%. I think it is clear that you do not find that --

Mr Marcoccia: There are two problems with that. The first is that it is a limit of two years. I am already carrying the burden of a loss here. If I were to go and spend $75,000 on this building, just to try to keep the water off of it, I would be losing the lot. After two years, this 3% increase will only total half of my expenses on top of the capital expenditures, let alone the loss of carrying it.

The Chair: Thank you for your presentation. Your time has expired.

The next witness is Dennis Wharton or Jennifer Lewis. We will take a brief recess.

The committee recessed at 1719.


The Chair: The committee is called to order. I want to inform the committee members that Mr Wharton has arrived and we have been notified that the last presenter of the day, Jennifer Lewis, has informed the committee that she will not be able to attend. So if we have extra questions for Mr Wharton, we certainly have time if there is no objection. Seeing that George is not here, I am sure there will not be any objections to my suggestion. Nothing personal against George, he just objects to everything I suggest, that is all.

Mr Tilson: On principle.

The Chair: On principle.

Ms Poole: Mr Chair, if we have extra time, I would suggest right now we call a vote on my amended motion that we have a former member of the Rent Review Hearings Board come and speak to our committee.

The Chair: As soon as we finish with Mr Wharton, we will deal with your motion.


The Chair: Mr Wharton, come forward and take a chair. The committee has allocated you 15 minutes for your presentation. You can reserve some time for questions and answers, and we are pleased to hear from you.

Mr Wharton: I guess I am here primarily as having been a tenant in the past. Currently I am a house owner, but I have the possibility of becoming a landlord in the future. I will admit at this point I have not even tried to read the proposed legislation in detail. As I think you can appreciate, there is a lot in there. What I have reviewed is the explanatory notes that were provided plus a couple of other pieces of information that I have managed to receive.

My concern, on the information that I have been able to gather from what is in here, is that this piece of legislation is really almost anti-landlord. My concern is that there is very little, if anything, that I have garnered out of here which is going to encourage people who are not currently in the landlord business, if I may use the term, to get into it, and there is an awful lot in here which is going to discourage people from getting involved in the future.

Certainly my future potential involvement in a project that we are currently considering -- it is only a small one, it is certainly nothing of the Reichmann group's kind of magnitude, but it still is potential rental accommodation in an area that is very tight on that particular facet -- I see very little in here that is going to encourage me or anybody else to really want to get into renting properties, and I see an awful lot that is going to discourage people from either getting into it in the future or, if they are currently in there, staying in there. Almost everything in here says that if you are a landlord, you are not in a very good situation here, and if you are a tenant, you are pulling all the strings.

So I would just like to put forth to this committee that I think this particular piece of legislation really has to be looked at, not so much what its effect is today, but what its effect is going to be three, four, five years down the road, when I really believe there is going to be an acute shortage of quality rental accommodation in this province.

This is almost forcing everybody into a slum landlord-type approach. If you are not there now, it almost assumes that you are or should be there and that you are going to end up there, because you just have no way of recouping your investment. Let's be realistic; people who invest money expect to get something back on it. If they are just going to be expected to donate money into accommodation projects with no possible hope of return on it, or myriad legislative requirements are just going to drive everybody absolutely bananas to try to keep track of -- they have got no control on how their costing is going to be maintained. Almost everything is totally out of their hands, and I do not see any incentive under that kind of situation to either stay in it if you are currently in it or to get into it in the future, if that is what you are proposing to do as a future investment.

Not everybody is in the rental business to be big-dollar landlords. Some people are looking for long-term retirement money. I do not see that in there. I see a deterioration of value of property, not an appreciation of rental properties.

In a nutshell, this is going all backwards. I really see this whole thing as going backwards. That basically is what I would like to put forward to you as my objections and my concerns about what this is going to do to the rental opportunities in the province. If you have specific questions I would be quite willing within my capacity to answer them, but as just one person who might be a potential landlord in the future, I am really thinking twice about getting involved in such a small way if this is what I am going to get involved in in the next few years. Even though I have got a five-year moratorium, supposedly, on a new project, there are enough little red tapes and little nooks and crannies that are hidden in here where I could lose that five-year moratorium that even that is debatable.

That five-year moratorium is in this particular act. That is not to say in two years from now the government is not going to come down with another one that is going to totally negate that five years and reduce it to two years, one year, three years, whatever. I see very few reassurances in here, but I see an awful lot of deadend alleys.

Mr Sola: You stated that you were a tenant once upon a time, but you approach this bill from the landlord angle. As a former tenant, what would your analysis be? Would it be favourable from that point of view or is that negative as well?

Mr Wharton: As a tenant in the past -- this goes back 10, 15 years or so -- I felt reasonably comfortable because there was this law of supply and demand which tends to keep things in check. If there is a demand for a particular product or service, then the people will try to get in and fill it. If there is not a demand, they will not.

I see this particular legislation trying to override that basic economic principle. The government is trying to legislate what the supply and what the demand can be, and that to me is a very dangerous thing to do. I think you are going to find there will be an erosion of the supply of the product because there is such a strict control on how the demand is going to be defined.

Mr Sola: So even as a tenant you would not be appreciative of this legislation.

Mr Wharton: No, definitely not.

Mr Sola: I am also interested in a statement you made. You said, if you are not a slum landlord now, you are expected to get there in the future. I wonder if you would elaborate on that, please.

Mr Wharton: Perhaps the term is not "expected to get there in the future," but I can see this legislation would force people to think very carefully about whether they want to invest future moneys in projects. One of the areas that concerns me specifically in here is the capital expenditures. If you make a capital expenditure and somebody somewhere in an ivory tower says, "No, this is not really needed yet," then you are not entitled to the increase in rent to cover it, which is that 3% cap, so I am not going to do it anyway if it is a major project.

If you leave it too late, then it is called neglectful, because you neglected to maintain your duties. Then you are going to lose it. So where is this happy medium point? At what point does somebody suddenly say, "Ah, this is no longer an unnecessary, frivolous decision," and at what point does it become neglectful? I am not sure how I would define that point, unless you have perhaps engineers or people like that come in, but certainly on a small project I could not afford it. We are looking at three triplexes. There is no way I could have an engineer come in every year and give me a full evaluation and say, "Oops, this year you'd better change your roof, because if you wait another year it's going to be neglect," but if you did it last year, "I'm sorry, that was frivolous."

Ms Harrington: You brought up several interesting comments. You said that you would think twice about becoming involved in this kind of business, and I say, "Yes, yes, you definitely have to think twice." This is what we have to have, landlords who think twice and three times very carefully about why they are getting into this business.

Anyone can say, "Great, it's a good investment," and this is what has happened in the past. We say, "No, it is not an investment as such." I would like to explain that. The nature of the business may change, which is one of the things I think you are commenting on. What will happen, we hope, are landlords who are in the business not just for investment but to actually be involved in providing housing. That is a day-to-day thing, not just as a long-term investment, but they see this as a worthwhile ongoing business to be in.

I say that any business venture is risky, whether or not you are investing in mutual funds or investing in the corner store. It is risky, and so we ask you to think twice about getting into this business, because we want landlords who are in there to work with people and to do it correctly. We, as a government, want to ensure that there is a good relationship between tenants and landlords.


Mr Wharton: I am glad you used the term "business," because I think you have to approach it from that basis. As somebody who is involved in several different types of businesses already, when I get involved in a business, I like to have some sort of feeling I do have some sort of control over what is happening with my business; I am not just along for the ride. Different types of business have different types of control that the owners can hang on to. What I see here are very few opportunities for a landlord really to manage his business. It is almost being already pre-laid-out on how it is going to be managed, and in some ways not a way that really is attractive to potential future landlords.

Ms Harrington: One final comment. I do understand at this particular point in time that there is a certain degree of uncertainty and apprehension because there is a change in the system, but hopefully once the system is in place you will be able to work with us and for the tenants, and help develop the system right now, which is what we are doing with you.

Mr Duignan: Along the lines of others we have heard, do you believe that housing is a right?

Mr Wharton: Certainly everybody has to live somewhere. It is the old thing; everybody got to be somewhere. Yes, everybody has to live somewhere. I guess that is my answer to that one. Yes, there are some rights, because you have to live somewhere. Whether it is on the street or in a penthouse, everybody has got to be somewhere.

Mr Duignan: Following along a presentation made by an earlier presenter trying to deal with poverty, they are even complaining about the 8% or 9% increase under this guideline. There are people out there who simply cannot afford it, and I know our good colleagues in the Tory party have said, "We can deal with that with subsidies to the landlord," or what I refer as to landlord welfare, but that is going to cost an additional $1.2 billion in taxes at a minimum. Which would you prefer, an increase in taxation to cover that, or some sort of a fair system to both landlords and tenants, as this bill is trying to do?

Mr Wharton: I will break your last comment into two parts. First, I agree with the basic concept of a fair system, but I am not sure this one necessarily is that fair system. I think this one really has got the tail wagging the dog.

The landlords certainly need rights. They are the ones who stand to lose big too. I am not saying they should all go out and buy condos in Florida as a result of every three-unit building they put up, but on the other hand, they stand to lose their investments.

I am also concerned about the erosion of property values as a result of this. People who are marginally mortgaged already, if their property values deteriorate as a result of this, may find they will not be able to renew their mortgages, because there is a very strict formula that lending institutions use, and if you do not meet those guidelines, then you are not going to get your mortgage. If property values go down 20%, 30%, you are going to find people are carrying mortgages that are worth more than their property. At that point, who picks up those properties, when they can no longer afford to carry them?

Mr Duignan: Do you have some suggestions on how to make this legislation, in your words, appear fairer?

Mr Wharton: I think the legislation has to look at the fact that the person investing money, and I do not care if it is in property or steel companies or money market funds or whatever, needs some assurances that there is a reasonably good chance to get some sort of return on his investment. Otherwise they are not going to do it. There are other ways to invest money than into renting properties. So you have to look at, are you going to attract people to spend their money in this manner? I am not going to go into detail, because this is obviously a very intensive document. You just have to look and try to put something in there that is going to make a landlord think he is important in this part of this process, and I do not see that in this document.

Mr Tilson: I think that is the whole crunch, sir, of this legislation and the Bill 4 legislation -- we have heard it specifically from the last two individuals who asked you questions -- and that is that housing is a right and that there is no need for private investments into the housing industry; no one should be making a profit at the expense of individuals. That is what this government is saying, that private enterprise should get out of the housing industry. In other words, it is following along with being typically anti-landlord, anti-business, anti-investment. If that philosophy continues, and it appears that it is going to continue, based on the fact that the parliamentary assistant, and I assume she has some authority over there, has said exactly that, where do you think the housing industry in the province is going to go?

Mr Wharton: I see it going very quickly downhill. Again, it goes back to the incentives. If you do not have an incentive to do something, and for businessmen the incentive basically is monetary, at least reasonably monetary, if that incentive is not there and somebody else is pulling all the strings on what is happening to your money and you have got very little control over it, you have to think twice about why you would want to do it.

I am thinking twice about the project, as small as it may be, about whether we want to to get involved in it. I do not know if I want to get involved in this red tape. I do not know if I want somebody else making all these determinations with very little input from my part. And if I am thinking about it, I am sure there are an awful lot of other people out there who are just as concerned, if not more so, and have a much bigger stake in this business than I do.

Mr Tilson: Do you have any thoughts on the complexity of the whole rent review process, the paperwork, the proposed hearings, all of that, as to how a small landlord or a small investor or a small individual getting into the business could handle that sort of complexity?

Mr Wharton: As the owner of several small businesses, the amount of paperwork for government at all levels, not just the provincial level, but federal, with GST, etc, municipal, etc, is just becoming mind-boggling. You spend more time shuffling papers than what you really wanted to when you bought the business, which is to administer the business. Certainly there is a level of paperwork required, but -- I guess my basic philosophy, the piece of paper, the only place it does not hurt is in the garbage pail. Obviously that is a little bit extreme, because reality says we cannot operate that way, but again, bureaucracy being the way it is, bureaucracy being a reality, the more bureaucracy you have got, the less seems to get done and the more stumbling blocks you run into.

The Chair: Thank you for your presentation. That concludes the presentations for today. Mrs Poole gave us notice a few minutes ago that she has intentions of moving a motion. If there are no objections, I would recommend that we use the time between now and 6 to deal with Mrs Poole's proposed motion and I turn the floor over to her.

Ms Poole: I would perhaps recommend we delay dealing with this right now. I would like to see if I can contact several former Rent Review Hearings Board members to see whether there is actually somebody who exists who would be willing to come, and second, if he or she would be interested, before proceeding.

The Chair: Why do you not remind the committee of your proposed motion so we can have some discussion on it, possibly now? What is it you want to do, Mrs Poole?

Ms Poole: I have suggested that since the government members seem to have a problem with having a member from the Rent Review Hearings Board attend our committee and give us a perspective of what it is like dealing both with the old legislation and any either problems or assets they see with dealing with the proposed legislation so that we will have that on-the-ground response -- Mr Mammoliti made the comment earlier that we had all sorts of experts, tenants and landlords, who had been before the hearings board who could comment, but I would say that I do not think we have heard a lot of testimony that has been from an unbiased, neutral source. Most people who come are partisan, either from a tenant perspective or from a landlord perspective, and it would be quite interesting to have comments from somebody who is supposed to deal from neither one nor the other.

I suggest that we delay actually having a vote on this until after we see whether there is somebody who fills that category. I am sure there must be people who have left the hearings board, and I would propose that we get somebody who did not leave on bad terms but just a mutual parting of the ways, somebody who could be an asset to our committee hearings.

The Chair: I suggest, before you make phone calls to individuals who may think they may be appearing before the committee, that we might want to have, if not a vote, at least some consensus that it is agreeable. I think it would be embarrassing if Mrs Poole found someone who was willing to appear and then she had to call back and say, "The committee has decided you should not appear." I do not know if that is to your liking or not, Mrs Poole, but I make that suggestion.

Ms Poole: Mr Chair, when have you ever done anything that I did not like, regarding rent control anyway?

The Chair: I cannot think of anything at the moment, but I have to be careful because Mr Mammoliti is back and he is ever-vigilant as to what I do and do not do.

Mr Duignan: Can I make a suggestion that we leave this over until tomorrow, until such time as we have a chance to discuss this among ourselves?

The Chair: It is just a notice of motion. There has been no motion really made and I think your suggestion may be a wise one.

The committee adjourned at 1752.