Monday 26 August 1991

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

Federation of Metro Tenants' Associations

Association for Furthering Ontario's Rental Development

South Etobicoke Community Legal Services

Sherwood Realty Group

Wilmot Creek Homeowners' Association

Nicholas O'Nians

Dawn Miller

Leslie Steiner

Ruth Harper

East York Tenants Association

Peter Miller

Parkdale Tenants' Association


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)


Cordiano, Joseph (Lawrence L) for Mr Mancini

Perruzza, Anthony (Downsview NDP) for Mr Bisson

Poole, Dianne (Eglinton) for Mr Scott

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

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

Wiseman, Jim (Durham West NDP) for Mr Drainville

Clerk: Deller, Deborah

Staff: Luski, Lorraine, Research Officer, Legislative Research Service

The committee met at 1402 in room 151.


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

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

The Vice-Chair: Good afternoon. The standing committee on general government will come to order. The business of the committee is to conduct public hearings on Bill 121. Mr Abel, you had a suggestion?

Mr Abel: Yes. Last week there was quite a bit of discussion about the search and seizure procedures and we asked for a clarification. However, the person from the ministry was not a lawyer and we thought we would get a better explanation if we had somebody who did have the proper background to explain a little better to the committee the search and seizure procedures. Dana Richardson is in the audience and if we could be allowed some time for her to give us a brief explanation, hopefully, that would clear up some concerns the committee members have.

The Vice-Chair: Certainly. Do we have consent?

Ms Poole: Might I suggest that since we are having the ministry present to us tomorrow, that might be a more appropriate time? If we do entertain that suggestion right now we will get behind, and we have a number of witnesses to appear before us this afternoon.

The Vice-Chair: I recognize that problem, Ms Poole, but we do have one cancellation in the witnesses, so the time element should not be that critical. I am at the disposal of the committee. Do we have consent to hear from the ministry? I do not think it should take a remarkably long period of time.

Ms Harrington: With regard to Ms Poole's concern, I have asked Dana and she said it would be very brief. I was concerned that it might come up again as an issue this afternoon; that we would need that clarification today. It is up to you.

The Vice-Chair: With the consent of the committee, I will ask the Ministry of Housing representative to come forward and identify yourself, Dana, and present your information.

Ms Richardson: My name is Dana Richardson. I am with the Ministry of Housing in the housing policy branch. I am speaking to you today on behalf of the policy branch, and if you need some more detailed legal clarification, we of course would undertake to provide that at any other time that might be convenient.

The powers of inspection under Bill 121 can be broken down into three types of inspections. The first type of inspection would be the kind that might be conducted by a hearings officer, a rent officer, in the course of a hearing. Under the Statutory Powers Procedure Act there is the power and authority for an inspection to happen in the course of the hearing, and that would be done in the presence of the parties or their representatives.

A second kind of inspection would be the kind done to determine if there has been compliance with the provincial maintenance standard, and this kind of inspection would be the kind that municipal property standards officers would do, where they look to see about the standard of maintenance as it relates to the provincial standard. It may happen that a work order is the result of that particular kind of inspection.

Then there is the third kind of inspection to determine whether there is compliance with other aspects of the legislation, for example, to determine if there has been a key money offence committed; those kinds of inspections.

In all cases, the inspection cannot occur unless there is consent of the occupier or unless a warrant is issued under the authority of Bill 121.

Those three principal types of inspections were actually available under the Residential Rent Regulation Act. There are provisions in Bill 121 that actually make it slightly more restrictive than under the previous legislation; for instance, the inspection can occur only between 7 am and 9 pm. There is the power of a warrant issued under this particular act. We believe that these particular provisions will protect the privacy of the individual in his dwelling place, as well as provide an opportunity for an inspector simply to inspect to determine if there has been compliance with the act and without the requirement that he actually seize things under that kind of inspection, and that these kinds of things would be consistent with the recent interpretations of the Charter of Rights and Freedoms.

I could go through some of the procedures actually set out in the legislation of what would happen if there is not consent and what would happen if there is consent for a particular kind of inspection. Some of them actually may be quite informal. If you have consent, you can make arrangements with the parties on when you would attend at the premises to look at the standard of maintenance, for instance.

Ms Poole: Thank you for that explanation. I am under the impression that a lot of the confusion around this particular section stems from the fact that "occupier" is not described nor indeed defined. It makes a difference whether the occupier can be both the landlord and the tenant or if it is only the tenant or is only the landlord, and I think that is the source of a lot of the confusion. Does the Ministry of Housing have a definition of "occupier," and can you provide that to us at this time?

Ms Richardson: The kind of thing we would be looking at, and it is not defined in the act itself, is that it depends on the premises. If it is an individual's rental unit, then the occupier would be the tenant. If it is that part of the residential complex that is under the sole control of the landlord, for instance, the furnace room or even the roof, that kind of thing, then it is the landlord who must give you that consent. If it is the common area, I think it could be both the landlord and the tenant in that kind of circumstance, but that particular circumstance I would like to ask our legal branch about.

Ms Poole: Could you provide us with some specifics on that tomorrow when the ministry makes the presentation?

Ms Richardson: We will certainly try to do so.

Mr Abel: Having heard your explanation, Dana, in fact these proposed powers appear to me after the explanation to be far more in line with the charter than was the case under the Liberal system. Is that an accurate statement?


Ms Richardson: The RRRA was not actually tested as an actual case that inquired into the charter implications of search and seizure, to the best of my knowledge, so I could not say what a court definitively would respond to that kind of statement. We believe that because there is a growing trend in case law under the charter, the provisions in this particular section are now more reflective of those growing trends.

Ms Harrington: At the last meeting of this committee, these procedures, the search and seizure provisions, were characterized as being Gestapo and establishing rent police in Ontario. Would you be willing to say that the provisions are more in line with the charter and respectful of people's rights, whether they be landlord or tenant?

Ms Richardson: We believe that they do comply with the charter provisions, and I would not like to say anything more than that.

Mr Tilson: I do not believe they are; this is no reflection on you; it is a reflection on the government. I think it is the establishment of a rent police, which is something that we have never seen in this country before. Looking through, just for example, the power to enter, which is section 113, they are wide, sweeping powers as to what the inspector can do. They can "enter any place." We do not know what that means. They can inspect anything they want. The wording says, "inspect any records or other things," and that indeed is wide and sweeping. It could mean the landlord's personal diary.

Ms Richardson: The purpose of such an inspection must be to determine whether there is compliance with the legislation. I mean, it is not entirely wide open for any other kind of investigation.

Mr Tilson: It is the type of police action that I think that we abhor in this country and I find it shocking. Under 113(3)(c) they can "inquire into any matters." That is indeed wide and sweeping and enables the inspector to do anything legally.

Ms Richardson: I believe that must be read in the context of this particular legislation and you must look to the purposes of the legislation. I could not agree with you that it is as wide as you are suggesting.

Mr Tilson: My suggestion is that when you are giving these people such wide powers, they should be quite specific as to what they can do, but you do not allow them to seize just anything, and that is what this section enables them to do, and they just cannot inquire into anything, and that is what this section allows them to do. Surely the legislation should be quite specific as to what they can seize and what they can make inquiries into.

Indeed I do say that this rent police clause, and that is clearly what it is, is almost a Gestapo type of inquiry, and I say that because there are no specific guidelines or restrictions as to what these inspectors can do. I can tell you that our party is not even in favour of the clause at all, but I think it would be most shocking if the government allowed this clause to pass with such general provisions.

Ms Poole: If the ministry could provide us with one more thing tomorrow when you present to us, that would be an explanation of where you intend for these guidelines to fall. For instance, you said the occupier would change depending on the circumstance. Are you going to put this in regulations? Are you thinking of an amendment to incorporate into the legislation? Is the ministry going to issue policy guidelines which just give an overview to people of what they may expect? Particularly with the limited right of appeal that is available now under this legislation, it will be very important for people to know what they can expect, and not only that, what the legislation requires. So if we could have that at the same time, I would appreciate it.

Ms Richardson: We will review that, Ms Poole.

Ms Harrington: Just to comment -- it is a final statement here -- I think, the intent of this government is clear, and that is to protect people's rights, and if the opposition wants to read in other motives, I believe that it is entirely wrong.

The Vice-Chair: I should at this point bring to the attention of members that you have before you a folder which contains many of the exhibits for Ottawa. I am sure most members will want to review those before we go to Ottawa, and we also have a submission from the Canadian Bankers Association, which will appear before us tomorrow, and you may want to go over that.


The Vice-Chair: The first presenter today is the Federation of Metro Tenants' Associations. As an umbrella group, they have one half-hour to make their presentation. I will be forced by the committee to cut you off at one half-hour, so those are the rules of the game today. If you would introduce yourselves and your positions within the organization for the purposes of our Hansard record, that will be appreciated.

Ms Hall: I am Joyce Hall, the chair of a volunteer board of directors which determines all the major decisions at the Federation of Metro Tenants' Association. Pat Fletcher is a staff person, the policy adviser, and one of four staff members.

Ms Fletcher: I would like to begin by stating who we are and what our long-term position has been on tenant issues. The federation is a non-profit organization of tenants, tenants' associations, honorary supporters and non-profit co-op members representing tenants in Metropolitan Toronto and the regional municipalities of Durham, Peel, York and Halton.

We have consistently taken the position that decent, affordable housing is a fundamental human right. Thus, the responsibility for its provision is a social one. This is a position that the current government has stated in several documents since it took power almost a year ago.

In May 1989, our federation held a tenant lobby day. On that day, then Housing critic Dave Cooke introduced a resolution to the House calling for rent control and defined it specifically as one guideline rent increase a year based on inflation. The current government rode to power on this platform, as stated in its Agenda for People. There is no reason for the NDP to have abandoned this position once in power.

The housing crisis has not abated. We are in a recession. The increased use of food banks and information about their users reveals that people pay their shelter costs before buying food. We know that tenant income is falling behind home owner income. A recent report by Wood Gundy states that wages of Canadian workers will not increase for some time to come because of a high Canadian dollar. Since 1980, rents have risen 11% to 18% in major centres, whereas real renter incomes have shown little or no increase. Thus, the affordability of rental housing has been in decline for some time.

I would add that there is no information to show the same trend has occurred in landlord income, so obviously now is the time to do it right. Yet what we see in this legislation is a continuation of a system which continues to guarantee landlord profit and chooses the bribery over the enforcement approach to maintenance. In important sections it fails to recognize that the landlord-tenant relationship is fraught with the problems of any relationship in which there is a large power differential. That is something that is very important to remember when drafting legislation. Some of the abuses of previous legislation have been curtailed. However, I think you will understand through this presentation why Bill 121 needs major revision to provide real tenant protection.

In the first place, rent increases above the rate of inflation will be the norm under Bill 121. This is contrary to what tenants were led to expect and contrary to what a people-oriented policy would provide. There are at least five ways that rents will be allowed to go up faster than inflation, and landlords are finding more even as we speak.

In the first place, operating cost increases: This has to do with the guideline and the guideline formula, which we found out last week is 6% for the coming year. Tenants are required to pay for increases in the costs that landlords incur in the operation of their buildings as part of the annual guideline. Although they are probably less able than landlords to pay for this inflation, the policy of permitting increases based on inflation has generally been accepted by tenants as well as the NDP. The only figures that the government has ever released put operating costs at less than one half of a tenant's monthly rent. Nevertheless, the majority of tenants, those in buildings with six or fewer units, will have the first part of their rent increase calculated as if these costs make up two thirds of their rent. This is the first step that Bill 121 takes to push rents up faster than inflation.


We recommend that you reduce the operating cost portion of the guideline to one half of the rent control index for all tenants. The plan to shut up small landlords by giving them a small bonus in their rent increase each year will not work and will only erode the affordability of rental housing.

The second way that this legislation will allow rents to go up faster than inflation is the 2% bonus allocated to capital expenditures. Rents are further inflated each year by an additional unjustified 2%. While the legislation declares that this money is allocated to capital expenditures, there is nothing that requires that it actually be spent for that purpose. For all the assurances that tenants get that it might be used to improve and extend the life of the building, you might as well have allocated it to Mediterranean cruises, because landlords are just as likely to spend it on those. I am sure it is quite obvious to everyone that unless you ensure that portion of the guideline is spent the way it is supposed to be spent, it is completely fatuous to insist or declare that it should be spent on capital improvements.

This is the same 2% that the Liberals included in their rent bill. The hundreds of millions of dollars that landlords have collected under this provision have not been spent on long-term repair and preservation of buildings, and our rental housing stock continues to deteriorate. This proposal, the 2%, was an experiment in trusting landlords to do the right thing, and the experiment has failed. The government and its advisers must start learning from experience.

If additional money is to be added on top of landlords' inflation protection, there must be a guarantee that it will be used to enhance and protect our homes. If you will not accept our proposals for a capital reserve fund to do that and cannot devise your own method of ensuring that this money is spent on capital work, the 2% bonus must be dropped.

The third way is cost pass-through of building maintenance and upgrading. After years of seeing the disruption the cost pass-through system of rent regulation has caused for tenants, it is almost impossible for us to believe that the government is proposing to continue it. Yet here it is. The NDP government has completely swallowed the landlord line on this issue. There is money to permit landlords to comply with their legal obligation to repair and maintain our homes and their social obligations to provide access to the disabled and to conserve energy.

Ontario's tenants pay $8 billion in rent each year. Where is all that money going? There is no information -- we do not know where that money is going. Where is the 2% above inflation that has been built into our rent every year since 1985 and now comprises about 10% of every rent? Where is all the money we are paying for capital work that has long been paid off? Virtually all these rent increases are on rents that were set before any regulation was in place. What kind of fool would set his prices in the unregulated market without making plans for the ongoing renewal of the income-producing property?

The answer to these questions is that there is a vast amount of money paid by tenants each month that should be used by landlords to meet their legal and social obligations. If the enforcement provisions of the various laws dealing with maintenance and repair were worth a damn, tenants could ensure compliance with them. But instead of ensuring decent homes for tenants, all the cost pass-through provisions do is open up ways for landlords, their lawyers and their agents to drive rents up ever faster.

Just so it will not be too hard for landlords to get their rents up, you have even provided for the convenience of an increase without even having to fully justify each annual increase. The Liberals called it a "phase-in." This government called it a "carry-forward" -- something that you might put your groceries in or carry a baby in. However, it is as sinister as ever, and leaves tenants helpless to oppose rent increases that they know are unfair.

I cannot describe to you the indignation that tenants feel and that we hear every day on the phone -- the increases that they have already paid and felt helpless to oppose. It was that feeling of helplessness that led tenants to vote for a change in government. They deserve more from the government they elected. If you are to allow increases above inflation to reward landlords who spend money to comply with their legal and social obligations, then all such claims should be tested at hearings where tenants can raise the issues that are important to them.

Finally, we hope you are not fooling yourselves that the definition of "eligible" as it pertains to capital expenditures in any way reduces the scope of landlords' freedom to impose unwanted or unnecessary work on tenants. There are experts who, for the right amount of money, will write a report on how a marble lobby increases energy conservation. We challenge the ministry to provide statistics as to how many capital expenditures allowed under the RRRA would have been disallowed under this section. Without even hearing the creative arguments of the landlords, we would be sure that they would still allow over 95% of these claims.

With the 3% cap, the government will be spared the embarrassing headlines of 20% rent increases for wasteful and unnecessary repairs. But over three or four years, the landlords will get the rents just the same. You will not spare low-income tenants the tragedy of economic eviction and homelessness or protect the standard of living of working families.

Four, the lopsided proposals for extraordinary operating costs: The proposals to allow increases above inflation for taxes, hydro, water and heating provide further opportunities for landlords to inflate rents and erode affordability. It must be obvious to you that there is no way that tenants will know if the increases in these items are extraordinarily low. Thus, the proposal will only increase rents, never lower them. Second, having taken the benefit of the increases provided by this proposal, the landlord will benefit again when those increases go into increasing the guideline in later years.

There are two ways to remedy this injustice: the hard way and the easy way. The hard way is to require every landlord to inform every tenant every year of the amount of taxes, hydro, water and heating costs applicable to their unit so that the tenant can make an informed decision on whether they should apply to rent review. The easy way is to remove these grounds for rent increases over the guideline and save everyone a lot of trouble.

Five, the invitation to force and fraud called "tenant consent": The front-line workers at the federation as well as at rent review services offices all across the province know how insecure most tenants are when it comes to confronting their landlords. However, the government continues to pretend that there is no imbalance of power in the landlord-tenant relationship and that landlords will not take advantage of tenants' need for a home to force rent increases that could not be justified.

The legislation proposes that tenants can agree to pay more rent in return for having work done on their unit or for having new or additional services provided to their unit. Who does not want a fridge and stove that work properly? Who does not want their unit painted after they have lived in it for a few years? But it is only those tenants who agree to an extra 3% increase every year that will get these extras.

There is no restriction of these expenses to necessary items or to replacement of things that need to be replaced. Anything goes. Leave it to the tenants to protect themselves against those landlords who wish to exploit these sections to push rents up. Would not a landlord be foolish to rent to a lower-income person when a higher-income person would be more likely to agree to extra increases every year? Landlords admit they already discriminate in this way, even when it violates the Human Rights Code. This government should not be providing landlords with further incentives to choose well-off tenants over lower-income tenants. Yet this is what these sections will do.

If that was not enough, landlords would be given an opportunity to pretend that the tenant agreed to the specified work or the new service even if he never had the chance to say no. This would be done by means of the advance determination, where the tenant moving out would be handed the prescribed form to sign so that the incoming tenant would be forced to pay the extra rent increase. The only recourse the new tenant will have to take his resentment about paying this increase is at the ballot box in the next election.

Six, the reappearance of the 1990 spending orgy: To this date, the one major rent control mechanism this government has implemented has been the creation of a moratorium on rent increases arising from capital work. Under Bill 4, the government, while stressing the importance of well-maintained buildings, recognized that tenants are already paying for the costs incurred by landlords in meeting their maintenance and repair obligations. It expected that landlords would exercise good business sense and maintain their investment. They would then recoup their costs upon sale.

While tenants were given a reprieve, it now appears that not only is this one good control mechanism to be removed, it is to be removed retroactively. Under Bill 121, landlords will be able to apply for an increase on the basis of capital costs experienced between January 1, 1990, and June 1991.


When Bill 4 was put in place the government stated that it wanted to clear out the backlog during the period Bill 4 was in effect. Now it will be creating a new backlog as landlords apply for increases based on old costs as well as making applications for more recent work.

This concession to landlord pressure is a fundamental breach of this government's previous promises. This government promised to hold rents down in 1991; it never told tenants they would pay increases in 1993 that would cancel out what they saved in 1991.

Essentially, this tactic operates in the same way as when landlords forfeit a rent increase for one year but are permitted in the next year to add two increases on to the rent and bring it up to the maximum. In the same way, landlords may have lost out in 1991 but they will still be able to jack up the maximum rent on the basis of 1991 work to the level that would have been chargeable had Bill 4 never been enacted.

To landlords, that is what counts. By raising the maximum rent, all additional increases taken become even more substantial. Landlords, with this type of claim, will be able to coast comfortably for the next several years on this ordered increase plus guidelines. To tenants, there will be no long-term benefits arising from the brief appearance of real rent controls under Bill 4.

Ms Hall: I am wondering if I could ask the Vice-Chair or the clerk for the clock time of the end of our presentation.

The Vice-Chair: You have 14 1/2 minutes left.

Ms Hall: Reserve fund: The capital reserve fund is a proposal that the tenant movement put forward as a way of ensuring that the residential rental housing stock remains in good condition or is certainly improved, as much of it needs to be. We would like to take this opportunity to say that we remain firm in our conviction that this province-wide reserve fund is the only road to the goals of extending the life of the existing residential rental housing stock, preserving affordability and improving the quality of life for renters.

The political will to take this step must be found. We hope it will come with foresight rather than belatedly after a flood of horror stories.

The Liberals promised that the residential complex cost index formula would be revisited to see whether the 2% bonus had been voluntarily employed by landlords to pay for capital expenditures. As I have said, that did not take place. In our presentation we refer you to a landlord deputation by James Bright. It never crossed his mind that he should use some of the 2% that he has been collecting all these years since 1986 to pay for capital costs. Obviously landlords have come into the habit of accepting this 2% as theirs to do with as they want.

The committee should not buy into the argument of some landlord lobbyists that it is in the economic interest of every landlord to maintain residential buildings, so of course they are doing so to the maximum extent possible. We refer the committee to the studies which led to the Rental Housing Protection Act. Studies at that time showed that a loss of 25% of the housing stock through conversion was anticipated if the RHPA had not been passed. Far too many landlords did not want to extend the life of their buildings. They wanted to convert them to alternate uses or sell them for the purposes of conversion.

The situation now is interesting in relation to real estate costs. Many older buildings sit on lots whose value has changed enormously since they were built. The expanding commercial core surrounds low-rise buildings erected in areas that were once exclusively residential. Urban sprawl has surrounded buildings that were once in outlying areas. A lot of rental accommodation is built on land that is one rezoning application away from being more valuable vacant than tenanted. Tenants do not have enough money to compete to be the most profitable investment on much of our urban land, but does that mean we sacrifice it?

In some cases the landlord's economic interest would be best served by milking the land for residential rental use until the receipt of a comply-or-demolish order -- these come from the municipalities -- then demolishing.

We can no longer pretend that money collected for capital expenditures will be used for that purpose if we leave that choice to the landlord's discretion. Later on in this presentation there is a case study of Tuxedo Court which makes this point very clearly.

The federation has developed a plan for a province-wide reserve fund because we believe that a broad income base will be required to do the necessary work. As the capital expenditure requirements of a building are not correlated to the ability of its tenants to pay, an individual building is almost certainly going to be either over or underfunded by an individual building fund. Preserving the existing housing stock and extending its life will meet important social goals, and the cost should be widely shared. The housing crisis has hidden social costs, and a broad-based response is both appropriate and necessary.

Disbursements for capital expenditures should be monitored for necessity, priority, quality of work and whether the work is actually done. We envision a structure similar to the current low-rise rehab program where provincial inspectors would confirm the necessity of work and confirm the successful completion of work.

Tenant advocates attempted to find a solution for the need to complete $1 billion in capital repairs in the immediate future. Such a huge problem requires a detailed implementation plan, and tenant advocates developed a creative solution. However, it may be that labour and materials are not available to complete all those repairs immediately and the costs of administering such a plan would be impossibly high.

None the less, even if a fund was established from the $500 million currently built into rents through the 1% capital expenditure allowance initiated in 1986, that $500 million would represent four to five times as much work as has previously been done in any one year. So tenants are paying for that work and it is not being done. This amount of annual expenditure would make significant inroads into the backlog and provide for as much major maintenance as we can reasonably hope to accomplish.

The Vice-Chair: There are about nine minutes left and the committee always appreciates some time for questions.

Ms Fletcher: Rent registry: Requiring landlords to provide information on annual rents charged is not a novel idea and should come as no surprise to landlords. In 1979 the Conservatives brought in the Residential Tenancies Act, which established a rent registry. In 1987 the RRRA made it clear that all residential landlords would eventually have to provide information regarding rents actually charged in 1985.

At the time the RRRA provisions were recognized as a general amnesty for landlords because 1985 rents frequently incorporated illegal increases taken over several years. None the less, these rents became legitimized as the base rent to which all future increases could be added. The Liberal government's legislation in effect condoned landlords' contraventions of previous legislation while promising to regulate landlords' activities in the future.

With Bill 121, this government is continuing this magnanimous tradition. It is again assuring landlords of four to six units that they will be permitted to benefit from their past transgressions as long as they promise to behave from now on. The magic from-now-on date is the date of the government's assumption of power, October 1, 1990. The rent on this date, whatever it was, will be the base on to which all future increases are added.

What is the effect of this provision? It drastically increases the chances that the registered rents result from illegally taken rent increases. Between 1987 and 1990 the severe rental housing crisis made it a landlord's market and rents skyrocketed to take advantage of what the market -- read the desperate consumer -- was prepared to pay. Many apartments and former single-family dwellings increased by several hundred dollars within one year without government approval.

This legislation, in accepting 1990 rents, legalizes landlords' illegal exploitation of tenants over the past four years. Bill 121 should simply incorporate those provisions of the RRRA by which the Liberals prepared landlords for having to file information. This requirement will come as no surprise to landlords. They cannot protest that the rules have been suddenly changed. The provisions are simply being applied, finally.

Complexes with under seven units are not necessarily owned by mom and pop, the small landlords who are unsophisticated in the ways of business and unaccustomed to keeping any proper accounts of such an insignificant source of income.

Bill 121 already provides for the registrar to exercise his or her discretionary power and to permit a landlord to register a later rent in certain circumstances. This provision takes care of those exceptional cases when the government does not want to be unduly severe with landlords who genuinely do not know how much money they have managed to accumulate in the past number of years. However, it is not necessary to exempt four- and six-unit landlords from having to account for the legality of their rents any earlier than October 1990.

If this government still has the political will to preserve the affordable housing that still exists, then the rent registry is fundamental to the realization of this goal. Affordable rents must start from an affordable base rent, which is not possible when that base rent reflects a series of illegal increases.


Ms Hall: I would just like to bring your attention to, on page 13, costs no longer borne. This is extremely important. It is the only way we see of bringing rents that have skyrocketed into an unaffordable range back down. There is a case history in there that I mentioned, Tuxedo Court, where rents are $1,200 a month and the building does not merit that kind of rent at all. These kinds of rents can be brought down if a costs-no-longer-borne provision is included in this legislation. It can remedy some of the devastation that has occurred under the RRRA. So I urge you to read that section and that case history.

On page 16 there is a section on the five-year exemption for new buildings as a backwards step. We see nothing to be gained from that at all and it was certainly a very great surprise for us to see it in the legislation.

On page 17, the procedure for hearings is also very important. I am afraid I am not going to be able to read through all this, but tenants feel so alienated from justice and from any recourse to justice as it is. If you eliminate their ability to apply for a hearing, you will be doing them a major disservice. One of the big problems, of course, is that tenants are not given enough time in this legislation. There is some kind of 15-day limit and they really will only have about five days' turnaround time after getting a notice of rent increase to figure out what they are going to do, and it is just impossible for tenants to apply for a hearing given that short notice. So we recommend that the hearings procedure that is in place be extended.

Moving to page 20, we do acknowledge that there are improvements. The elimination of financing costs as grounds for rent increase is a major improvement. We were also pleased to see that no longer will tenants have to pay hikes in rent due to mortgage increases incurred by the landlord.

I will jump now just to the conclusion. Bill 121 does not address the issue of buildings where the rents have already skyrocketed out of the affordable range. As I said, the costs-no-longer-borne provisions would help there. It does nothing to guarantee that buildings that are still affordable will remain so. Note that we have a complex formula that came out at the end of last week, the building operating cost index formula, ensuring that all of landlords' possible costs are covered by an annual guideline increase, and 2% is tacked on to that. Under Bill 121 landlords can apply endlessly for a 3% bonus. Where is the formula that ensures that tenants' homes remain within the range of their incomes? If you can come up with a fancy formula to make sure that all the landlords' costs are covered, what about retaining affordability? Where is the affordability index? There is no formula, no clause, no measure whatsoever in this legislation which defines or even uses the word "affordability" or looks critically at the cost of rental housing and seriously looks at the future and what we can anticipate from this legislation in the future if it goes through as it is written.

We cannot assume that market forces will moderate rents. Here is what has happened in a few buildings where rents have risen out of market range. In one of our member tenant associations the new tenants are coming in at $200 lower than the existing tenants because the landlord is trying to attract new tenants. You can imagine how angry the old tenants are. They go to the landlord, they say: "Hey, my neighbour in exactly the same apartment is renting for $200 lower. I want a rent decrease," and the landlord says, "No such luck." So they feel totally infuriated. Also, that new tenant who has come in at the lower rent is sitting on a time bomb because the registered maximum legal rent is $200 higher than what he or she is paying, so given appropriate notice he could suddenly get a drastic increase in his rent.

Another of our tenants' associations reports that, yes, the tenants are leaving because the rents are unaffordable and the landlord is converting to hotel apartments. We all know that that is illegal, but that does not stop them from doing it.

Another tenants' association in a building which has municipal work orders outstanding reports that the landlord is just letting the suites remain vacant. What the landlord's game is we do not know, but it is anyone's guess. He may just be waiting for a comply-or-demolish order from the municipality and then to try to jump through a loophole of the Rental Housing Protection Act and convert the building or demolish.

The majority of tenants, however, stay put in buildings where the rents have skyrocketed, and they pay up. They make sacrifices because they have to. One reason people give is that they cannot afford the first and last months' rent they need to move out, so they are on a real treadmill. Other tenants double up, so you get social costs involved in overcrowding.

We have not had time to deal with the puzzling decision to get rid of the Residential Rental Standards Board. It fulfilled an important role and should not be allowed to expire.

We look forward to having further input into Bill 121 in the near future. I will conclude simply by saying this piece of legislation needs major revision. Thank you.

The Vice-Chair: Thank you. We appreciate your presentation and, at times, your speed reading. Unfortunately, your time has expired and there will not be an opportunity for the committee to place questions. Thank you very much for appearing.

Ms Poole: Mr Chair, since we have had two cancellations this afternoon, would it be possible to have unanimous consent to extend their presentation by five or six minutes at least, so we can have one opportunity to question?

The Vice-Chair: Do I have unanimous consent for that?

Mr Tilson: I guess the difficulty, Mr Chair, is that there are other groups that may say the same thing. To be fair to everyone, I think we should treat everyone the same.

The Vice-Chair: We do not have unanimous consent.

Ms Hall: Okay. You can always get hold of us at the federation.



The Vice-Chair: The next presentation will be made by the Association for Furthering Ontario's Rental Development, Mr Alan Every. Good afternoon. Your group has been allocated one half-hour. I will attempt to be somewhat helpful in warning you as you come to the end of that half-hour. The members appreciate an opportunity to ask questions. If you can leave some time in your presentation, we always appreciate that, but it is totally up to you. You may begin.

Mr Every: I am Alan Every. With me is Bert Reitter. We are both from AFFORD.

AFFORD has prepared a detailed submission, which includes sections A through G, together with 12 appendices in support thereof, which I hope you all have before you now. The following comments summarize our thoughts with respect to the issues of Bill 121, Ontario's rent review legislation, and rent controls in general.

Many of those in attendance today are here because AFFORD invited them to do so by placing an ad in the most influential daily business publications in North America last Friday. Why, you ask? Because these hearings have been poorly attended, not by those with vested interests from all walks of life who have invested their time to prepare and present their submissions but, more important, by the media, upon which the populace of this province relies for informed and accurate reporting of events in order to formulate opinions concerning matters which are, or certainly should be, of grave concern when it comes to issues the determination of which, in this case, could needlessly cost Ontario's taxpayers billions of dollars, inflating a bloated deficit which will undoubtedly lead to higher and higher taxes.

The media have a responsibility to communicate the real facts that must be understood by all concerned if an informed, intelligent public policy concerning housing is to be adopted by this new government, assuming it is influenced by public opinion, which we are sorry to say is not likely the case. Only if the true facts and the evidence, including the opinions of those numerous experts in the field of rental housing who have testified before you, are publicized outside of these hearing rooms, only then will the public have any chance of understanding.

These hearings, like those for Bill 4, will have been such a sham, not because of the participation of the opposition parties but because this government formulates policy based on an ideology which is blind to truth and common sense, a party which adheres only to a dogma founded in convenient fictions perpetrated by the propagandists of a political philosophy which was proven beyond doubt, once again, by the very events of just last week halfway around the world, to be a universal failure.

Why is the future of the residential rental industry so important to Ontario? Because this industry has invested in and manages nearly 1.2 million apartments, which are known as home to over 40% of the residents of this province; because our industry, as a member of the business community, provides the cheapest form of self-contained accommodation in Ontario, at an average rent of just $550 a month in 1990, which on average absorbs less than 18% of tenants' incomes; because this government believes that rental housing in Ontario should not make a profit, a fact confirmed by then minister Rosario Marchese at a public meeting held on July 2, 1991. I refer you to appendix 3. It believes the government can do it better than business, that it has been given a mandate indeed to drive us out of business.

In the democratic free world, expropriation by governments for fair compensation is nothing new, but this is not what has been going on in Ontario for the past 11 months. This government has entered into an unholy alliance with the so-called tenant representatives of the far left to pass legislation which, in the very words of the highest elected official of this province, spoken in the Ontario Legislature on May 2, 1990, "will decrease the value of buildings, and landlords will want to get out of business....I do not see why a building...should not be able to be purchased by the tenants as a group and should not be able to be operated on a non-profit basis."

Your legislation goes far beyond the issue of "protecting" tenants. That could have been accomplished quite readily, by dealing with the so-called "abuses," by dealing with "flips" -- not to be confused with the legitimate sale of a property by its original builder to a purchaser 20 years after construction, as has commonly been the case with the vast majority of our purchases -- by dealing with the truly rare incidences of marble lobbies, rather than condemn an entire industry to financial hardship of varying degrees. It does not take a Rhodes scholar to figure out that, for example, the solution to the problem of drunk driving is not to ban the consumption of alcohol universally.

The fact is, your legislation will indeed serve to accomplish precisely what the Premier of this province has, both inside and outside of the Legislature, stated repeatedly and publicly that he would do: force down values by driving down cash flows and force landlords into a position of having, out of necessity, or wanting, out of fear, to leave the industry altogether, in either case the path having been paved for a cheap buyout by the province on its own account or as agent, in either case for the direct benefit of those who it perceives elected this government to office.

For Ontarians, this is not democracy in its finest hour. No democratically elected government should consider it to be its right to orchestrate the plundering of wealth of a legitimate minority in society for the direct financial benefit of a greater identifiable minority, as well of the populace, in order to curry its favour in return for votes. We believe this government has, at the very least, a moral obligation to defend and protect all segments of society. Instead this government, by its very actions, has chosen a path of effective confiscation of values, in many cases to be quickly followed by a loss of ownership, and for the rest, a voluntary departure from the industry, sooner or later, at continuingly depressed prices as investors avoid our industry, from the certain fate that lies ahead.

For your information, in one of the first, but certainly not the last, incidents of a Toronto landlord who incurred capital expenditures on her buildings, the related application having been denied by Bill 4, has just today been evicted from her home, together with her five children, because she personally guaranteed a mortgage loan that could not be refinanced due to your legislation. You can see for yourselves later on CFTO-TV more details of her plight.

How does this government justify this behaviour? Because it shamefully believes that the end justifies the means, by conducting a campaign intended to discredit all landlords, a campaign that the Fair Rental Policy Organization of Ontario so eloquently described as a "`big lie' program...the classical tools of propaganda: distortion and avoidance of facts, pejorative characterization of an entire population based on the behaviour of a tiny minority, and the use of biased and inflammatory language to try to influence the populace."


Mr Turnbull: Mr Chairman, would you please instruct these people to be silent or eject them from the room.

The Vice-Chair: This is a proceeding of the Legislature of Ontario. Interjections of any kind from the audience will not be permitted.

Mr Every: After 15 years of coping with successive generations of rent controls, landlords are now being held responsible for the very symptoms of an ailing industry that past controls guaranteed would inevitably come about. We are now being made a scapegoat for what can squarely be laid on the shoulders of the NDP, whose mentors in the past have taken full credit for forcing the issue in 1975. Landlords have clearly, through your legislation, become the victims of prejudice and persecution -- for the older members of our industry, for not the first time in their lives -- a matter the Premier should be personally most sensitive to.

All of the factual evidence -- rental statistics from CMHC and Statistics Canada compiled for the last 20 years, from economists, from the Ontario government's own industry study conducted by Royal LePage in 1989, from the independent report of the Commission of Inquiry into Residential Tenancies headed by the well-respected Stuart Thom, and not to discount at all the majority of those informed submissions made before this committee with respect to Bill 4 and Bill 121 -- is overwhelming and exposes this propaganda campaign as being nothing short of a malicious concoction of misinformation, half-truths and misrepresentations, all designed to deceive both tenants and the public at large, to induce a passive acceptance of your plan to, in effect, confiscate without compensation the economic value of our buildings, to create an atmosphere of apprehension among landlords and to lay the groundwork for your perceived constituents to buy us out.

I am a chartered accountant, a partner in Ontario's largest privately owned residential management business, and was personally instrumental in the purchase and financing of many buildings, including the acquisition in 1986 of 5,700 suites of the former Cadillac Fairview buildings. As one who possesses by training the experience and knowledge of valuation of apartment buildings and businesses in general, I can assure you that any business as a going concern is only worth the present value of its future long-term cash flows, which I appreciate can be a difficult concept for a lay person, a non-business person, to understand. However, any change in circumstances that can reasonably be expected to negatively influence the future income of an apartment building will result in the devaluation of that building directly proportionate to the degree of anticipated decline in net income.

In fact, values of rental properties across Ontario have plummeted by 20% to 30%, not at all due to the economy, since our industry, with close to full occupancy at all times, is virtually recession-proof. Values have fallen drastically for one reason alone, the sudden decline in the expectations for the future of this industry in Ontario; in economic terms, a decline in demand contemporaneous to an increase in the supply of buildings for sale.

What changes in the legislation, those heralded by Bill 4 and Bill 121, will cause future cash flows to decline? The elimination of the financial loss provisions on a retroactive basis ensures that buildings, once expected eventually to break even, will now lose money into perpetuity. It is a fact. As well, unavoidable future capital expenditures will not give rise to increases in rent to compensate the building owner by enough to cover even interest on loans, if they can be obtained to perform the work, and current cash flows certainly do not cover major repairs. As well, the annual ceiling will, after 1992, represent approximately 80% of inflation, meaning that when the purchasing power of the dollar is accounted for, rents and profits, if any, will actually decline.

What has made these changes so unfair is how they were made -- retroactively, by changing the rules in the middle of the game, so to speak, which is in any language known as cheating; and cancelling the eligibility of recovering the cost of capital expenditures after the money was spent, often having been borrowed, is known as theft.

Mr Chairman, the evidence is overwhelming. Rent controls simply do not work. All of the major newspapers have editorialized against rent controls. Economists who are neither tenants nor landlords have told you that they do not work because they never have.

The problem, in a nutshell, is not that of excessive rents for all tenants, but of insufficient incomes of a clear minority of tenants, and that, we submit, is not the fault of landlords. The only honest solution to our mutual dilemma is to institute some form of shelter allowance paid out of general tax revenues to those who truly qualify.

Your government has already acknowledged in the spring budget that it does not have the money to build and subsidize the horrendous costs of its alternative to our solution. We implore you to come to your senses. Put an end to controls gradually over, say, five years, and let the business community do what it can do best: Restore health to this province's rental industry, and, in doing so, take a giant step towards the recovery of our ailing economy.


The Vice-Chair: The Liberal caucus is first, followed by the Conservatives and then the government. Ms Poole.

Ms Poole: Thank you for your presentation. How much time do we have?

The Vice-Chair: Almost six minutes.

Ms Poole: Each? This is strange.

The first question I would like to ask you refers back to your comments on page 6, when you say, "In fact, values of rental properties across Ontario have plummeted by 20% to 30%, not at all due to the economy, since our industry, with close to full occupancy at all times, is virtually recession-proof." Do you have any statistics or documentation that would show there is any differential between, say, September of 1990, prior to the introduction of any rent control legislation and, say, October or November of 1990, after the introduction of Bill 4?

Mr Every: We have a number of clients who have had appraisals performed immediately before the election, and in the months to follow and just recently. I can assure you that in every case, there has been a drastic decline in values where the identical buildings were being appraised under identical circumstances. The cash flows had not changed, but the market had.

Ms Poole: Would this be true of, say, the 1981 recession where apartments, rental units, basically held their value because of the occupancy rate?

Mr Reitter: If I may answer that, Ms Poole, in the recession which you just referred to, there was absolutely no change and I mean virtually no change in the escalation of values of real estate properties. Here, we have not only a change in the escalation, we have no escalation. We have a de-escalation.

I can share with my colleague, Alan Every, and with you an experience. We had a major project appraised by a very conservative appraiser about six months prior to the election in September of 1990. The project has now been put up for sale because the landlord simply feels that there is no future in this industry. The only offer he has received is a full 40% less than what the appraisal was. That has never been here in Ontario. Not in 1981, not in 1975. When rent review was first brought in, we thought, "Oh my goodness, it is going to affect values." It really has not because in those days, although there was a rent review with which we did not agree philosophically, we were able to live with it. We were able to survive with it. We were able to adjust. But we cannot adjust to the brainchild of this party opposite. This is just totally impossible. We cannot adjust to it. The business cannot adjust to it because it is essentially anti-business legislation.

Ms Poole: The second question I had relates to the use of statistics. We, in this committee, are getting a variety of different statistics about the same subject. I am going to refer to the inflationary component of the guideline, the building operating cost index formula. Under the previous Liberal government, it was set at two thirds, and now, under this legislation, for small buildings under six units it will still be two thirds of inflation, but for large buildings it is going to be 50%.

The Fair Rental Policy Organization has told us, according to its calculations, that the average should be 58%. The Ministry of Housing is telling us it relies on a Royal LePage study which says it should be set at 44% to 48%, so it is saying 50% is generous. We are getting flooded by all this different information. Can you explain the difference in the two approaches?

Mr Reitter: With your permission, yes. I would like to address that question because, obviously, it has been bandied about quite frequently. I can assure you that the average ratio of operating expenses, when looked at as a percentage of income, is closer to 60% than to 50%. It is certainly in the 58%, 59%, 60% range.

One has to ask, how does a reputable firm such as Royal LePage come up with 48%? I spoke to people of Royal LePage, and I asked them whether my interpretation of their statistics was correct. I said: "I don't want you to badmouth your own company. Just say yes or no approximately." The following is the case:

When Royal LePage, a company for whom I have great respect, as any other real estate company, becomes involved in a transaction with a residential real estate property, they take a projected income. They say, two days' rent is so and so much, and over the next 12 months, taking into consideration certain increases, the building will generate X number of dollars. So they freeze the income into the future. They take a snapshot of the future and say, "This is the income of this building." And then they look at last year's tax bill and last year's utilities, and then they say, "Well, maybe 2% management fee will suffice," and they come up with an operating expense that no longer reflects the same time element that the income reflected. Of course it is far lower than if you took the operating expenses of the same time slot that the income was taken at.

When I discussed that with two members of Royal LePage -- unfortunately, I must admit to you that neither of them was instrumental in the preparation of the statistics to which you refer -- when I suggested that to them, they said that they had internal conversations; they deeply regretted the presentation of that particular statistic, and they totally and completely concurred with my analysis that when they made that publication, they simply looked into their computer information and said, "Income so much, expenses from last year so much." And it just does not work.

Mr Tilson: Mr Every referred to the fact that statistics have been given to this committee that rent controls do not work, and it has been proven specifically; I assume you mean in New York and other American jurisdictions. The socialists will tell us "Well, look at British Columbia." British Columbia had rent controls. They took rent controls off. They have a speaker coming tomorrow to speak on this subject, that they took rent controls off and nothing improved. In fact, things declined; Rental accommodation did not increase; Builders did not start to build apartment accommodation. Could you comment on that situation?

Mr Every: I would like, first, to refer all of you to appendix 8, that the statement made previously at another session that I attended before this committee -- I believe it was Mr Drainville -- is totally fallacious and based on a report and conversations we have had with CMHC in Vancouver. Quite the opposite has been true. I would refer you to that appendix that clearly shows that it was a very healthy situation that evolved after 1984 in Vancouver when controls were dropped. The vacancy rates rose.

Mr Tilson: You are saying that what the government is saying simply is not true?

Mr Every: It is totally wrong, and it is borne out by CMHC's statistics. Phone the individual involved there; they can explain them.


Mr Tilson: Another example of a big lie, I guess. Mr Turnbull has some questions.

Mr Turnbull: Mr Reitter, if you do not mind, could you try to make your answers brief so I can get more in? I would like to explore this question of declining values. It has been suggested -- by the NDP, needless to say -- that the reason values are declining is because it is in lockstep with other investments such as shopping centres, office buildings and so forth. Could you explain to me the difference between an unregulated market declining, and its relationship to vacancy rates, and something which is a regulated market where we do not have that same vacancy rate?

Mr Reitter: I will try. This is a very big question to answer as quickly as you would like me to answer it.

Mr Turnbull: Yes, I know.

Mr Reitter: I will try, though. If you have a regulated market, that regulation, by virtue of its existence, eliminates the new supply. Therefore, the value of the limited product that is still available increases, even beyond its actual value. It increases because the supply is no longer there, and the supply is not there because no one wants to build under the world that the NDP wants to create in this province. On the other hand, shopping malls, to which they have not as yet gotten around, and industrial complexes have been built galore, because no one wanted to put their dollar into residential development, so everybody built shopping centres, office buildings, industrial complexes. So we have office buildings in Metropolitan Toronto averaging about 8% to 10% vacancy factor. Industrial, in some areas of the city the vacancy factors are horrendous. Everywhere where the free market is still operating, we have vacancy rates, and we have landlords competing with each other and being good landlords. In the residential controlled market, the moment they started with the controls, that was when the investment dollar froze up.

Mr Turnbull: Also the suggestion is made by the NDP that those people who are losing money in apartment buildings simply made a bad buy, and it seems to me that in most cases the people were buying it at 40% of replacement cost. Could you comment on that?

Mr Reitter: Of course, a suggestion that those people who are now losing money simply made a bad buy is absolute nonsense, because we bought at a time when we had an opportunity to analyze the regulations and the conditions of the legislation in the market, and when we bought, all of a sudden a drastic, fundamental change came about. Let me please -- and this is going to take 45 seconds -- tell you a little story that I experienced when I met with the NDP's then Minister of Housing.

When I had realized that his eyes began to glaze over and he was no longer interested in anything anybody had to say, I thought to myself "I have to wake this man up," and I said to him: "Mr Cooke, let me propose to you one simple scenario. You and I sign a contract, and you know me, Bert Reitter, to be an honourable man and the company I represent to be an honourable company, and that contract bestows upon you, Mr Minister, certain benefits, and you finally can do what you have always dreamed about doing. You can go and buy the house for yourself and your family that you have always wanted. You clean out your bank account, you sign a mortgage because you now can do that, you signed a contract with an honourable man, and you move your family into this wonderful new home, and you have just put the last piece of furniture in place when there is a knock on the door." I said, "Mr Minister, there is a man there that you have never seen before and he says to you, `I am sorry, but I just took over Bert Reitter's job, and the contract that he signed with you is null and void.'" I said, "Mr Minister, you are going to say to this man: `Just a minute. I have just cleaned out my life savings and I have put my name on the line for a contract, for a mortgage that I won't be able to live up to. You can't do that.' And the man will laugh at you and say, `Watch me.'"

Mr Turnbull: Of course, Mr Rae suggests he wants partnership. This does not engender partnerships.

Mr Reitter: Some partnership, I say.

Ms Harrington: It is, at this point, quite astounding that you have not yet come to grips with the reality of this province, and that is --

Mr Reitter: I have not? You have not, Ms Harrington. Your side has not come up to the reality.

Ms Harrington: I am sorry, but I have the floor at this moment.

Mr Reitter: By all means. I apologize.

Ms Harrington: The reality is that the government of this province believes in rent control. Now, the Conservatives started rent control. The Liberals continued a massive abuse of this system, and we have believed that we have to correct this situation.

Ms Poole: Mr Chair, on a point of order: In this committee we have tried, in so far as it is possible, to keep this non-partisan, but if the parliamentary assistant keeps making such outrageous statements, then I am afraid it is no longer going to be a non-partisan forum.

The Vice-Chair: Unfortunately, that is not a point of order. Ms Harrington.

Ms Poole: But it is a point of view.

Ms Harrington: I believe that you do not want to work with this government --

[Failure of sound system]

Ms Harrington: -- with us, as a government. I wondered what your objective is in this, and the only conclusion I can try and come to is that you are trying to stop investment in Ontario.

Mr Reitter: That is the most ludicrous statement you have ever made, Ms Harrington.

Ms Harrington: If the media and/or the --

Mr Reitter: Let me tell you why we put this ad in the paper.

Ms Harrington: I am speaking, Mr Chairman.

Mr Reitter: You have asked me a question --

The Vice-Chair: It is difficult for the Chair to decide when you --

Ms Harrington: I will give the gentleman a chance to respond.

Mr Reitter: You asked me a question. Give me an opportunity to answer the question, Ms Harrington.

The Vice-Chair: Please, one at a time.

Ms Harrington: I will give you a chance to respond. If the public or the media would care to read this over, they will see that the objective of this type of advertising is certainly to try and get investment to go out of the province of Ontario.

I would like to point out that the people of this province have confidence in the Premier, Bob Rae. You just have to look. Last night --

Mr Reitter: Absolutely.

Ms Harrington: I am speaking.

Mr Reitter: We are not discussing Mr Rae here. We are discussing your hare-brained legislation. We are not discussing Mr Rae.

The Vice-Chair: Ms Harrington has the floor.

Ms Harrington: During your presentation, I did not interrupt you.

Mr Reitter: No, that is correct.

Ms Harrington: I believe that the people of this province do have confidence in Bob Rae when they compare him, last night even on television, to the other premiers and/or the Prime Minister of this country.

The only conclusion I can reach is that you are trying to wreck Ontario, to go against the people of this province. What we have seen, even last week on the television, that is what happens to right-wing coups who try to go against the will of the people.

Mr Turnbull: They were communists, Margaret.


The Vice-Chair: Order, order.

Mr Perruzza: On a point of order, Mr Chairman: When the Conservatives objected to our questioning some other deputants today, they said no, they did not want hear people, nobody on this side stood up and objected to not hearing from people who had come to make deputations --

The Vice-Chair: Mr Perruzza --

Mr Perruzza: I am getting to my point of order, Mr Chairman.

The Vice-Chair: I was about to rule that you have a point of order, that interjections are inappropriate at all times.

Mr Perruzza: Thank you, Mr Chairman.

Ms Harrington: Thank you. Gentlemen, you have asked for a free-market system, and then you ask for a subsidy, which is certainly not a free-market system. This is total unreality that you are coming with today. You want to charge people whatever the landlords like and expect the taxpayers to give a $1-billion subsidy, and yet you advocate, in this way, a larger deficit. Totally unreal thinking. Or you argue for a larger pass-through. I would like to tell you that in the past there have been lots of pass-through systems and yet the buildings were not kept up. Finally, I wanted to tell you that we are here today to work to amend this legislation to try to make it better, and you are obviously not interested in helping.

The Vice-Chair: Would you like to respond?

Mr Reitter: Was I asked a question? I do not know. I think Ms Harrington made a rather political statement about the right-wing in Moscow and so on. I do not know; was there a question there?

Ms Harrington: Well, you gentlemen made that remark as well.

Mr Reitter: Was there a question there somewhere along the line?

Ms Harrington: You opened your presentation --


Ms Harrington: They did that, they opened with their presentation --

Mr Perruzza: On a point of order, Mr Chairman: The question was placed. You are allowing --


The Vice-Chair: Mr Perruzza has a point of order.

Mr Perruzza: My point is, Mr Chairman, I did not think this was a session where you were going to engage in debate. Questions were going to be placed to the deputants. The deputants were going to answer the questions and not involve themselves in political hyperbole.

Ms Harrington: My colleague has a question.

The Vice-Chair: Well, it is very nice, but there is not time for another question. Thank you very much, gentlemen, for appearing before us.

Ms Poole: On a point of order, Mr Chairman: Mr Reitter made a comment about the Royal LePage study when I asked him to differentiate why we are getting two different sets of statistics, and he made an inference that there may be some problematic features. Can we ask for Royal LePage to give us a letter to our committee prior to the commencement of clause-by-clause, either substantiating Mr Reitter's comment or in fact validating their study?

The Vice-Chair: I am certain we could inquire as to Royal LePage's intention. I think that would be a reasonable thing for the committee. We could instruct the clerk to clarify those comments with Royal LePage, if possible.

Ms Poole: I would suggest that perhaps we give a copy of the Hansard to Royal LePage so they have a basis for their comments.

The Vice-Chair: Thank you. That is a good suggestion.



Mr Hale: Mr Chairman, my name is Kenneth Hale. I am the lawyer/director of South Etobicoke Community Legal Services. Our organization has made written and oral presentations a number of times in the past on these issues, most recently concerning Bill 4 and concerning the rent control consultation.

I came here prepared to go point by point in a legalistic way through the proposed Rent Control Act, with which I have some serious differences, but having heard the previous speaker, I think it is important that someone from the tenant side speak up about the blatant untruths and misrepresentations that AFFORD and its ilk are spreading around this province and in fact around the whole continent.

The first thing that is most shocking about AFFORD's approach is its complete disloyalty to our country and its absence of any concern whatsoever for the effect of its bizarre actions on the welfare of anybody in this province except the welfare of those people who manage rental housing.

The blatant untruths in their ads -- I am sure we are all aware that financial markets operate to a great extent on rumour and innuendo and things, and not necessarily on the true facts, which I heard very few of. But the blatant untruths put forward in the ad that they published in foreign newspapers as well as in our own financial press -- that $20 billion in value had disappeared, that private property is being confiscated -- it is just completely untrue.

If you look at what they are proposing, in the end their solution is virtually the same as the solutions that they rant and rave against. Their solution is to sell the buildings to the tenants. The only thing that they are putting these ads in the paper for and appearing at this committee for is to drive the price up. They think the government is trying to drive the price down. They want to drive the price up by removing any kind of control over what they could charge or what kind of conversion could be carried out. So their solution -- to make everybody home owners at ridiculous prices -- makes them see the mirror image of that solution, of driving down the prices to ridiculously low prices, in the government's modest rent control proposals.

I would think that after a year of the NDP government, one could have seen the rush to abandon apartments already starting. I do not think -- there is not one apartment they can point to that has been abandoned because of this government's attitude towards private landlords. There is no property that they can point to that has been confiscated.

I see Mr Every and his friends at CFTO have managed to find a hard-luck story of a landlord with five children being evicted because she could not meet her financial obligations. This is a real man-bites-dog story. These landlords, the members of AFFORD and the members of FRPO, every day are evicting hundreds of tenants, many of whom have five children and more, from rental apartments across this province because those tenants are unable to meet their financial obligations because of the recession, because of the high rents that the rent regulation system permits, and this is not news. However, when one landlord loses some financial investment and is put to the indignity and humiliation of being evicted, it becomes a big news story.

Where is CFTO when those hundreds of tenants are being evicted every week? I can assure you that if you go down to the district court, you can look at those lists and you can see family after family losing their homes because of their inability to meet their financial obligations, to pay the rent.

Their position seems to talk about synergism, with the government, the private sector and the public sector working together. I think their vision of that is the private sector ordering the landlord to do something and the government doing it on the landlord's behalf, whether it is raising the rent review guidelines beyond what anybody can pay, whether it is permitting them to demolish or convert at will.

They talk about how poor tenants suffer discrimination, that landlords discriminate against poor tenants. They admit it and they assume that this is a natural phenomenon. In fact, in the written material they refer to how "naturally, landlords are going to discriminate against poor tenants." Once upon a time, slavery was considered a natural part of the economic order, and not too long ago, women were considered to be inferior as a natural part of the economic order. The blatant discrimination against poor people by landlords is not a natural part, but it is a conscious policy of unethical and often illegal conduct. It is only tolerated because the Ontario Human Rights Commission is always in such turmoil and these people cannot be made to account for their illegal and unethical actions.

As tenants finally begin to gain some rights, the landlord community starts talking about destructive class war, whereas before it was just healthy tension. It was healthy when the landlords could win all the time. When tenants have a chance of winning something, all of a sudden it becomes destructive class war.

Their answer to all this is the shelter allowance scheme. They say it would cost $200 million. It sounds like an awful lot of money to me, but I guess to you guys it is not a huge amount of money, and you would be willing to give the members of AFFORD $200 million while letting the tenants' hands touch it, or many of you would. But a study which was done for the Co-operative Housing Association of Ontario and the Ontario Non-Profit Housing Association shows that the actual cost of a housing subsidy scheme such as they propose is at least six times that figure, and perhaps 12 times. Do we really think that Ontario's taxpayers are supposed to pay an extra $1 billion or $2 billion just so Mr Every and his friends will not take out ads in the foreign press? I am not willing to make my contribution to that waste of public money and I think there are very few people who would do it.

I just think it is ridiculous for them to come here and ask that you would give them this amount of money just because they happen to have made these investments at some point in time. They admit that it is impossible to remove rent controls without this incredible subsidy to them, so I think their suggestion that rent controls should be removed should be completely dismissed, and even their suggestion that they should be weakened. In fact, the rent controls that are proposed are not adequate to protect tenants and are not adequate to stop the erosion of affordability. They are going to make it continue that tenant family after tenant family is going to be evicted because they cannot meet the rent payments.

Just a few of the other things that he mentioned, such as the plummeting value of his apartment buildings. We do not see any figures but we hear a lot of talk. This man does not seem to realize that 10% of the people in this province are on welfare and that 10% are not able to pay the kind of rents that he would like to be able to charge them, and this is a significant component of why the values of his buildings are plummeting.

He uses very inflammatory language concerning theft and cheating and things like that. I think what his actions amount to is extortion of the people of this province, and especially the tenants of this province -- attempting to extort money out of them with the threat that he is going to demolish our economy or make our apartments fall down or take steps which in any way must be considered to be some kind of a threat.


One of these landlords' favourite things to refer to is the Thom inquiry. I hope you people are aware of enough history to know the Thom inquiry, phase 2, was conducted without tenant participation, that tenants withdrew, boycotted the Thom inquiry because it was obvious where the Thom inquiry was going. It was obvious from the predisposition of the commissioner and his research person John Todd, who I understand presented here, that they were concerned almost solely with ensuring landlords' profits and that the rental housing market kept churning and making money. They were not concerned with the problems of affordability for tenants, except in a peripheral way, "How can we shut these people up so that the landlords can go on making money?"

Even John Todd, the research director, in his brief to you says he believes the rent control system proposed by Bill 121 is basically the same as we have had under the previous two governments. How this man could be their hero, that they could live with the controls under the old government, while this great researcher they have says there really is not any change -- how can they reconcile those? They cannot. It is rhetoric. It is nonsense. They have taken an extreme position to try to get you to move off the very reasonable position tenants have that this does not provide adequate protection to them.

Mr Todd's study, which I understand many people found to be quite interesting, found that stability of rent increases, protection from economic eviction, protection from discriminatory rent charges were the results of strict rent regulation. To me, that was a good thing. Those are things which should be supported, and should be supported at substantial cost to the landlords if necessary, but he concludes that this kind of protection should be dispensed with. It should be eased. Again, he brings in the old Thom inquiry answer of bringing in a shelter allowance.

I do not know how many of you read the Financial Times. One short year ago John Todd was writing an editorial in the Financial Times proposing rent cost pass-throughs be discontinued, that the guideline rate of 4.6% should be raised by about 1%, and that money be taxed back from landlords and put into investment in non-profit housing. Now the political winds have shifted. He is able to make more money by coming here and saying rent control is bad. But a year ago he was saying it was good and should be strengthened, and yet he has piles of statistics and things going back to the position which is supported by the more conservative elements because that is who is paying the freight now for his kind of studies.

I would ask you to look at the provisions. I think many of the things Joyce Hall raised in the federation's presentation, many of the things other tenant groups have raised, have to be seriously considered: that this legislation does not go far enough and we have to admit there is an imbalance of power between tenants and landlords. We have to do things which will help tenants to organize, to counteract that imbalance and protect them from the worst abuses of that imbalance at the present time.

Mr Tilson: How do we stop this adversarial system? In other words, you are coming and making, perhaps, disparaging remarks about Mr Every, and Mr Every did not refer to you, but perhaps came in and made disparaging remarks about the other side. Listening to the evidence around the province, this has been one of the major criticisms: that the adversarial system is not going to work. Hitting each other over the head is not going to work. Sitting down and trying to solve some of these very common problems is the only answer. You have asked some questions. How would you propose the two sides become a little closer?

Mr Hale: I represent a lot of tenants and tenant groups and the first thing I always propose to tenants is, let's write a letter to the landlord to see if they want to have a meeting and talk about this problem. Many of these letters have been written. One or two landlords have ever responded to my request to meet. If people feel they are --

Mr Tilson: Can I just interrupt for a second? My question specifically was legislation, not with --

The Vice-Chair: I am sorry, the time is very limited. Mr Abel.

Mr Abel: Mr Hale, would you not agree that decent, affordable housing is a fundamental human right?

Mr Hale: Yes, I do.

Mr Abel: And I am sure that stand is based on some very disturbing experiences you have probably had with some of your clients. In terms of financial stability and quality of life, how have extra rent increases affected your clients? Could you share some of your experiences with us?

Mr Hale: The first effects are eviction because people cannot pay the rent. The second is scrimping on food and other necessities to meet the rent payments because they cannot find the alternatives. I believe every dollar tenants pay to landlords beyond what they can afford costs society money.

Ms Poole: When the federation of metro tenants made their presentation a few minutes ago, they brought up a concern about the way necessary repairs are covered in the act and said they are afraid that a good, slick lawyer could get marble lobbies put through as energy conservation. Do you have any suggestions for that particular section of the act to tighten up some of the definitions, some of the provisions, to ensure they are not taken advantage of but actually do what they are intended to do?

Mr Hale: First, I think the cost pass-through for capital should not be allowed, period. That would solve the problem right there. Beyond that, I believe virtually everything that was passed through under the old system could be passed through under the four criteria that were set out in the legislation. Energy conservation is very broad. One thing that could be done is to put a very clear definition of capital work in the legislation so that regular, everyday, every-month, every-year maintenance does not get bunched up. I think if there is going to be a pass-through and the legislation is going to try to put some control on it, then that definition should clearly be in there.



The Vice-Chair: The next presentation will be made by the Sherwood Realty Group, Robert Lowe.

Mr Lowe: Mr Chairman and members of the committee, thank you for the opportunity to address you regarding Bill 121. I am a real estate broker entering my 10th year of marketing, almost exclusively, apartment buildings in Ontario. My firm, Sherwood Realty Group Inc., has assisted non-profit, government and quasi-government organizations, in addition to the private sector, to buy or sell sixplexes right up to the larger developments.

My own personal experience in this marketplace exceeds $150 million worth of apartment building sales. We are consultants to all sectors of the business and are regularly sought to assist realtors who need advice on the highly-regulated Ontario rent control environment.

I wish to address three main categories today, though analysing the proposed legislation is akin to tiptoeing through a minefield not knowing what will explode next. These issues are capital expenditures, financing costs, arbitrary categorization of properties.

With respect to capital expenditures, I have brought along a few children's toy building blocks to make a point. I would like you to imagine, if you would, that each of these blocks represents a 30-unit, four-storey apartment building. They are all located adjacent to each other on the same street in your own ridings. The first has average rents of $350 per unit, the second has average rents of $450 per unit, the third $550, and the fourth, $650. You will note that they are all the same size, the same layout, the same number of suites, 30 units, and they have the same roof area. The only difference is not visible. The annual incomes vary from $126,000 to $234,000.

Let's imagine that each building, being the same age and same location, requires a new roof and it has been estimated to cost $35,000. As you know, the proposed guideline contains an allowance of 2% for capital expenditures, and each owner will apply to increase his rent the additional 3% for the next two years under the carryover provisions. We will assume they will not have any reason to expend, during the following three years, the 2% allowance contained in the guideline on any extraordinary operating cost increases or any additional capital expenditures. The point very simply is that each owner will invest all the funds he gets in a rent increase allocated by the government solely to the roof replacement.

Each owner will finance his work by taking out a loan from his friendly bank for five years at 12%, fairly standard rates. The mathematics develop a useful formula which I would ask you to note because it is important in understanding the concept. The formula is: for every dollar of rent increase awarded in the very first year, one can afford to spend $4.02 -- or in round numbers $4 -- in capital improvements. Since the maximum increase justified in year one ranges from $6,300 to $11,700, it follows that the owners, under the best-case scenario, can spend $25,200 to $46,800.

You will notice that the owners in the two lower-income buildings cannot afford to replace the roof. The same maintenance standards apply, would you agree? The same rain water leaks in each roof. The only difference in the buildings is the income. When multiplied by this same percentage factor, you get dramatically different increases. You can see how the arbitrary guideline increase will result in the lower-rent buildings continuing to deteriorate drastically while the higher-rent-level buildings will deteriorate at a lower rate. Remember, we have assumed no extraordinary cost increases; no other capital expenditures will be required for a period of five years.

We all know realty taxes have skyrocketed, not to mention the double-digit increases Ontario Hydro already proposed. We have not talked about gas, water and any other maintenance expenditures; we have not talked about anything else that might need to be done to that building. There is only so much money allowed. How does an owner viably survive? The answer quite simply is he will not. If you move these buildings now around the province, take them out of your ridings and spread them around, then all sorts of other macroeconomic issues cloud the issue. But the rate of increase, guideline plus 3%, stays the same. Any prudent person will spend no more than he can repay. Your challenge as a committee is to solve the problem. I will give you a hint: Allow an increase that reflects the actual justified cost of the work with a reasonable cap on any increases in any one year.

If we take these buildings and stack them up, which is basically what a high-rise apartment building is, we have now got 120 suites, but we have the same roof area. We have 120 apartments contributing to the cost of replacing that roof. But you think, "Aha, the larger buildings have it better." Remember, we traded four large lots for one and we now have an underground garage that salt has ravaged. It can never be repaired under this bill's proposed guideline plus 3%. That is the reality. It cannot be; the numbers are not there.

The problem has been defined, the solution provided and the point, to bring it home to you personally, is quite simple: What would you rather have, 5% of your salary or 5% of Premier Rae's? The cost of bread and milk are the same.

With respect to financing costs, contrary to popular belief within the governing party, most apartments are not flipped but are sold as a result of changes in the owner's needs or health. Builders who own many of these buildings are aging. Some die, others want to retire, others must plan for the future and realize that the partnerships formed in the 1950s and 1960s do not work as smoothly in the 1990s. When these owners sell, they require substantial amounts of money, cash, to pay the capital gain and income taxes governments have come to expect and depend on. These funds are usually arranged by the purchaser, who must place a mortgage on the building as collateral for the loan.

It is a fact that mortgage costs over the past decade have been less than 10% about 10% of the time. If a property is purchased today, the odds are nine to one that the interest rates will be higher upon mortgage renewal. How much reserve do you build in? We would have as many answers as we have people sitting around this table. Furthermore, the seller will likely have to take back financing at less than market interest rates to assist the purchaser with the purchase. When these vendor-take-back mortgages renew, they will definitely be at a higher cost.

Something I have noticed: Buildings that have the lowest rents are often the ones that have little or no financing. Tenants of those buildings have already had the benefit of low financing costs. Why does a new owner or one who renews his financing have to continue to subsidize all the tenants in his building when statistically speaking the vast majority can well afford to pay more? Playing this game of gambling with interest rates does not benefit the tenants and more than anything will sound the death knell for apartment building owners.

Even if it is Premier Rae's desire to buy apartments, we all know that the interest costs and increases in rates will be borne by either the residents of the complex, if it goes co-op or non-profit, or the taxpayers of this province. Let's not delude ourselves any longer. You have to pay sooner or later. Why not leave the financing provisions of Bill 4 in place in the interim, or more realistically, reintroduce the previous Bill 51 approach with some control criteria to eliminate abuse? Just because you did not like the act, you do not throw the baby out with the bathwater. There are some provisions that need to be addressed in an economic sense, and this government must recognize that.

In terms of arbitrary categorization of properties, there is no justifiable reason to have two guidelines based on the number of units in the building. I know there have been suggestions that expenses per suite are higher in a smaller building. That is a mathematical fact rather than a basis for determining government policy and legislation. The argument is much stronger to have regional guidelines based on geographical locations or guidelines based on the type of properties.

Town houses, for example, are apartment buildings laid on their side. The roof areas are much larger on a per-unit basis. They generally have individual heating plants and domestic hot water heaters, all of which cost more initially and are much more expensive to maintain than those contained in the single apartment building. Furthermore, some tenants of town-houses pay all of the utilities. Thus, they absorb and are currently absorbing all utility increases directly, including the GST, which will not represent itself in the guideline until 1995, as you are well aware, and are more likely to heed the energy conservation messages touted by various utilities, whereas in others the landlord pays all the utilities. This results in lights being left on when people are out, windows that are left open in the winter and long, hot showers that are the norm.

But in its wisdom, the government has swept aside all of these differences and said the guideline is higher for complexes six units and less. It is ludicrous. It makes absolutely no sense. There must be one guideline for all units, with a flexible increment and a reasonable cap on rent increases. This is the only way that this bill can combine the mathematics of reality with the stated goals of the NDP platform.

In summary, Bill 121 must be changed. Private sector housing must be given enough freedom to make decisions in a fair regulatory environment. Public sector housing costs have always exceeded those in the private sector. As Bill 121 is presently drafted, apartment owners are playing Russian roulette with all the gun chambers full. They cannot avoid being shot and killed. The government has the opportunity to correct its erroneous actions played out in Bill 4 by now listening to this private sector, subsidizing the tenants in need and allowing the housing sector to get on with what it knows best and can deliver better than any government.


Ms Harrington: Thank you very much for your presentation. I think you have tried to help us along with some suggestions here. I just want to point out to you that there is no way at this point in time that we can correct all the sins of the past legislations which you have enumerated, some of them. We can go back to October 1, as we certainly tried to do, but we cannot go back any farther to rectify a problem that has existed, when you talk about buildings of the same size with different rents in them, that type of thing. We cannot rewrite that history of the Liberal rule from 1985 to 1990. Sorry.

I also wanted to point out to you and various other people who may be interested that the 6% index that was announced last week is something that the minister and the officials will be looking at, how that is calculated with the new legislation proposed. As you know, the 6% was calculated on the basis of the RRRA and we are not entirely satisfied with that.

Mr Mammoliti: There is a question here, Mr Chairman. Do we have time on our side?

The Vice-Chair: No, you do not. Mrs Poole.

Mr Turnbull: Mr Chairman, with Mr Tilson's agreement, I would like to give the NDP time. Here we have an expert, somebody who knows what he is doing. Let them get these questions out.

The Vice-Chair: If you are suggesting they can have your time after Ms Poole, they can. Ms Poole.

Ms Poole: Thank you for your presentation, particularly the building blocks. The simpler you can keep it for members, the more chance that we might actually comprehend what you are saying, so I thank you for that. I do not know what galaxy Ms Harrington was on when she made her comments about your brief being a critique of the previous administration of rent review; I thought it was a critique of the current one.

The question I have relates to the examples you used in your first case scenario about the roof and the four different buildings. When you made these calculations that the maximum increases justified in year 1 range from $6,300 to $11,700, were you taking into account the full 2% that is allowable under the guideline plus the 3%, the full calculation?

Mr Lowe: That is right.

Ms Poole: And were you taking into account the second year that the 2% would be deducted again?

Mr Lowe: That is right.

Ms Poole: And also for the third year?

Mr Lowe: That is right.

Ms Poole: So this is a case scenario of how it would be under the current act where two buildings could afford to make the improvements and two could not?

Mr Lowe: To answer that question and to sort of hit Ms Harrington's question, the difficulty you have is that you are introducing legislation not at time zero, which would be great. I mean, if we started today building a new building, you would introduce a reserve fund and away we would go. The difficulty is that you have to recognize that there are dramatic differences in buildings even if they are identical. I tried to reduce it down to saying they are the same building. So with that recognition, a flat percentage causes problems. You have been hit with that same difficulty when you hear about a 200% increase of a $100 rent. The fact of the matter is it is only $300 when you do the numbers, but the reality is it sounds huge. So that same situation exists, and I think that is what we are trying to say. We are trying to say, reserve all of the possible money that you could possibly put into this one repair, and those are the numbers that you come up with.

Mr Turnbull: Mr Tilson objects to us giving the time to let them make lunatic speeches about communists taking over and suggesting it is right-wing, and I do tend to agree with it, it was certainly --

The Vice-Chair: A point of order, Mrs Harrington?

Ms Harrington: It was the conservative wing of the Communist party we were talking about. Mr Turnbull seems to be an expert here.

The Vice-Chair: Ms Harrington, do you have a point of order?

Ms Harrington: Yes, I did have a point of order. I cannot quite remember it at this point.

Mr Wiseman: Mr Chair, I think we are using unparliamentary language. But I do have a question, if I ever get the mike.

The Vice-Chair: I am not really certain whether it is or not, but --

Mr Turnbull: I am not sure that it is, but in the interest --

The Vice-Chair: You could consider withdrawing it, perhaps.

Mr Turnbull: I am looking at --

The Vice-Chair: Mr Turnbull, will you withdraw the remark?

Mr Tilson: On a point of order, Mr Chair: I do not think he referred to any specific individual as a lunatic, I think he referred to all of them as lunatics, and I do not think when you do that it is unparliamentary.

Mr Wiseman: Mr Chair, I would say that within the confines of the rules of decorum of the House, any implication that members of the House sitting -- that constitutes unparliamentary language.

The Vice-Chair: In the interest of getting on with this, Mr Turnbull --

Mr Turnbull: May I suggest the legislation is lunatic.

Ms Poole: I also have a point of order in relation to Mr Turnbull's comments. Would he please clarify who "them" are? The NDP?

The Vice-Chair: Mr Turnbull, would you clarify your remarks, perhaps?

Mr Turnbull: I will clarify my remarks. I am talking about the legislation being lunatic, not individuals, just the sum total of the legislation.

The Vice-Chair: Now you have a minute.

Mr Turnbull: Okay. Mr Lowe, you correctly point out the inadequacy of this legislation in the sense that you have buildings of the same age which have radically different rents. Would it not be correct to say that in fact the tendency would be that the buildings with the lowest rents would probably be the buildings which were in most need in large capital costs?

Mr Lowe: That is right.

Mr Turnbull: And that they would need to put in energy conservation measures and that would cost more?

Mr Lowe: Generally, that is true. That is the difficulty we are trying to face.

Mr Turnbull: If they are going to have this legislation, should they not differentiate in those respects?

Mr Lowe: There has got to be some allowance for the fact that the older buildings, and smaller buildings in general, which were built a number of years ago, are in need of major work. I mean, the buildings were built 30 years ago with steel windows.


Mrs Hinkley: My name is Ruth Hinkley. The submission before you with respect to the Rent Control Act, 1991, sets out the concerns of the more than 1,000 residents in the owned-home, leased-lot retirement community of Wilmot Creek. Information with respect to the community is given in part II(b) of the submission, and a breakdown of the 1989 maintenance expenses is attached. Part II(a) of the submission relates to concerns the residents would wish to see addressed in permanent legislation following the expiry of the interim legislation January 1, 1993. In part I of the submission I comment on the Rent Control Act.

We applaud the government's efforts to respond to concerns over high rent increases and to reduce the complexity of the current rent review legislation. Then we note our hope that the clarification with regard to the act being applicable to land-lease properties will ensure more rapid decisions on landlord applications for rent increases. It is not fair either to the residents of Wilmot Creek nor the landlord for rent review decisions to be pending since February 1989.

Our comments on definitions in the act mainly concern the term "permanent structures." This terminology is important to the residents, since it is their contention that their single-family homes are not mobile nor is the community a mobile home park. I will speak further to this issue under part II of the submission.

To continue with part I, on page 3 of the submission we question and ask for clarification under application of the act, subsection 2(1), whether because of the repeal of the Residential Rent Regulation Act, 1986, and the fact that this clause is the same as in the 1986 act, does the exemption for those who signed leases prior to May 2, 1985, still apply?

We question also whether under clause 3(1)(b) of the act those persons who use their homes in Wilmot Creek only on weekends, pending retirement, are exempt from rent control.

Support is noted for the time-limited exemption under subsection 3(5), and under rent control, part I, we support the maximum rent clause under subsections 5(1) and 5(2). As well, we support the new 12-month elapsed period for rent increases. Under "Extraordinary operating costs" we ask for confirmation that the 3% is not in addition to the cap on maximum rent. Also we would advise that we believe the landlord should be able to cover these costs within the percentage increase allowed under the guideline.


We are particularly concerned about refinancing costs. In the case of Wilmot Creek, the loan interest for 1989 -- and this is shown in the statement attached to the submission, $783,152, almost half of the total maintenance costs of $1,700,632. We note too our concern as to financial disclosure by the landlord. Under "Capital expenditure" we have asked for clarification as to consent, but we are aware that your response to this question to the Ontario Owned-Home Leased-Lot Federation was that it applied to only one apartment. We do not consider this can be applied to our type of community and we have provided an example, under "New or additional service," of a current issue. And we note again the need for financial disclosure by the landlord.

Under "Rent chargeable before order" we have asked for clarification and an example. Those of us who reviewed the act had differing opinions on the meaning of this clause. Under the "Cap on maximum rent" we question, as we did under "Extraordinary operating cost," that the 3% cap is inclusive of the extraordinary costs. Under part II of the submission I have noted previously that the residents of Wilmot Creek do not consider their homes to be mobile nor their community to be a mobile home park. This and other concerns which we would see addressed in permanent rent control legislation, or legislation for owned-home leased-land communities similar to that enacted for condominiums, we are putting forward in part II.

We are aware and we express to you our dismay that your committee is not able to deal with these concerns at this time, because the government, as far as I know, has not received the report from the interministerial committee which reviewed the problems in owned-home leased-land communities. There is an urgent need for reform. And in its present form, since the act relates mainly to apartment rentals, it is very difficult for the residents of Wilmot Creek and, I would venture to say, our landlord to determine the act's applicability to our community. We hope it is the intent of the government to deal with the interministerial committee's report and allow dialogue between the government, the residents and the landlords prior to the enactment of permanent legislation.

Along with the requirement for an appropriate category separate from mobile connotation, we wish to see in permanent legislation a legal requirement within the Planning Act for leased land to be described in accordance with a registered plan of development. At this time the land for which we pay taxes cannot be registered because there are no defined borders. Also, the need for the landlord to register a plan of development would require adherence to municipal standards for roads, sewers and lighting. Better standards could bring about a substantial decrease in the maintenance costs included in the rental package. I have spoken for the need for financial disclosure and note again there is no mechanism to ensure that the residents pay only what they have contracted to pay.

We see, too, a need for easing of resale restrictions. Last, we note there should be a study with respect to the assessment mode for owned-home leased-lot communities which provide amenities such as a recreation building and recreational facilities. The residents of Wilmot Creek have appealed their assessments since 1985. The assessments include a value adjustment factor for the amenities, yet the residents pay for the administration and upkeep of the amenities through their maintenance costs which are part of the rental package. An Ontario Municipal Board judgement has acknowledged that we pay an extra amount when we purchase the house for these amenities. In effect we are paying thrice over for these amenities.

I appreciate very much the opportunity I was given, which I did not expect, to put before you the concerns of the residents of Wilmot Creek, and I thank you for your attention to this submission.

Ms Poole: Thank you very much for bringing the special and unique circumstances of the owned-home leased-lot communities to our committee today. I think I can gather this from your brief, but do you agree that homes in these particular circumstances should be dealt with by separate legislation?

Mrs Hinkley: Yes, I do and so does our association.

Ms Poole: We will be very anxious when the ministry comes tomorrow to ask them about the progress of the interministerial committee. Could I also ask the ministry when they come tomorrow if they could provide clarification for a number of the questions Mrs Hinkley has asked in her brief about interpretation of the legislation for mobile homes and for owned-home leased-lot communities? I think they are unique circumstances and we must make sure the act reflects that until such time as it can be replaced by separate legislation.

Mr Tilson: I think we are all looking forward to the report from this interministerial committee, which has been promised for some time, and hopefully it will not go on too much longer. One further question Ms Poole raised: I believe you asked, at least by implication, the simple question whether you can contract out of Bill 121; in other words, by signing the lease which may be contrary to what Bill 121 says. Was that one of your questions?

Mrs Hinkley: Yes. It says in the bill that this bill is applicable, if I remember correctly, to all rentals, and the same clause is in the rent regulation act 1986. Yet in the rent regulation act 1986 there is a clause that those persons who signed their lease prior to May 2, 1985 do not come under rent control. We have a good number of those in our community, so we have approximately 70 homes in the community not under rent control, who just abide by the terms of their lease, whereas the others are all under rent control. I could not make out from the proposed legislation whether this still applies.

Mr Tilson: The second question I have is with respect to the issue that has been raised by both the owner and the tenant. When the government comes along and says requirements for a sewage system need to be upgraded substantially, requirements for an electric lighting system need to be upgraded, a new road system -- substantial moneys need to be spent to undertake that. The tenants say: "If you average that out, spread it out, we can't pay it. We can't afford those increases." The owners are saying exactly the same thing -- these tremendous amounts of money required which normally municipalities pay.

Mrs Hinkley: If I could interrupt you, what I have tried to make clear in this submission is that this type of community does not abide by municipal standards. They do not have to build the roads or do the sewer systems in the manner they would have to if they had to submit a development act because it is one large private property. This increases our maintenance costs because the sewer breaks because of substandard material; the roads, instead of being like this, are like this and they break up and --

Mr Tilson: But we have had evidence --

The Vice-Chair: Thank you. Ms Harrington.


Ms Harrington: Thank you very much, Mrs Hinkley, for coming again. I believe I met you before -- you were here.

Mrs Hinkley: Yes.

Ms Harrington: You have made it very clear that you, as a group of people in Ontario, want protection just as other tenants -- well, you are not exactly tenants -- need and want protection. I hope that is getting through to some of the people who are here in this room. You have also said that obviously mobile homes are not mobile so we must not think of it in that way.

Mrs Hinkley: No, they are permanent structures.

Ms Harrington: We are very much awaiting the interministerial committee's report in October, because I think this is a very important issue. It has arisen as an issue in many parts of the province and is very complex. When I think through it very thoroughly, about the problems associated with it, whether environmental concerns, sewers, roads or the Planning Act in Ontario, and ensuring that these kinds of communities are wanted within municipalities, I really think previous governments have not taken the time to care about the people who live in these communities. They have put this issue off until it is almost too late, because there are a lot of people being forced out of their homes and their communities across this province and I do not know whether we will ever get it back as a viable option for affordable homes. I really look forward to working with you to establish legislation which will work.

Mr Mammoliti: Perhaps you can answer one of my questions now. They are not portable, these homes?

Mrs Hinkley: No.

Mr Mammoliti: There is no way of taking them away.

Mrs Hinkley: No more than a conventional home.

Mr Mammoliti: If somebody wanted to refinance, could you refinance these homes and the land, or just the homes and not the land?

Mrs Hinkley: Just the homes. The land is rented.

Mr Mammoliti: So if you went to a bank and said, "I want to refinance; I want to carry a mortgage and I want to add my land and see how much it is worth and all of that," you will not be able to do that, right?

Mrs Hinkley: That is true.

Mr Mammoliti: So if you are stuck, you are stuck.

Mrs Hinkley: In many ways. I know one of the banks is doing mortgages on these homes. Previously we could not get mortgages, but now there is one bank which is allowing mortgages to be taken.

Mr Mammoliti: What bank is that?

Mrs Hinkley: I am sorry, I do not remember which one it is.

Mr Mammoliti: Could you let us know, maybe with a phone call or something?

Mrs Hinkley: Yes, certainly.


Mr O'Nians: My name is Nicholas O'Nians. My wife and I own a 12-unit apartment building in Port Hope. I had worked for 32 years with the then Massey-Ferguson Ltd and as a supplement to my pension invested in an apartment building. The building was purchased in 1982.

I have made two submissions on the proposed rent control legislation: the first to Mr Mancini on January 10, 1991 in respect to the interim legislation, and the second to Mr David Cooke on April 2, 1991 regarding Bill 121. Nothing that has transpired since has made me wish to change any of my submissions. I stand by what I stated and herewith resubmit them.

There are three general points I wish to make before moving to specifics:

1. I agree that the low-income segment of Ontario society should be assisted by the government, that is, the taxpayers of Ontario, in the provision of housing, subject to what the taxpayers are willing and can afford to pay.

2. I am deeply ashamed -- and I say this with total sincerity -- of the enormous national and provincial debt I will be leaving to my children and my grandchildren to pay interest on and try and pay off that debt. I cannot imagine that any one of you here would deliberately incur personal debts on the basis that your children will have to pay them off. Similarly, I cannot forgive you for loading my children and my children's children with obligations resulting from current expenditures incurred in my lifetime. Capital expenditures are a different matter.

3. Premier Bob Rae has recently been very vocal and outraged about the Supreme Court decision which permits the federal government to restrict the increase of transfer payments to Ontario. I cannot recall any similar expression of outrage by Mr Rae when the government introduced retroactive legislation which resulted in many landlords suffering hardship and loss -- some, enormous loss. In the same vein, no outrage was expressed when landlords had to absorb the GST on their operating and other capital expenditures. In short, do unto others as you would have them do unto you.

Moving towards the specifics of rent control, I wish to make four points:

1. There has been speculation reported in the press that the NDP government intends to eliminate private rental housing and become the sole owner of rental units. Furthermore, to reduce the purchase price of these units from the private sector, the legislation will be made so oppressive that the sale price will come down and thus enable the government to buy them on the cheap. This philosophy and approach is diametrically opposed to the Ontario and Canadian tradition of free enterprise. If it is indeed your intention to take over private rental units, I hereby ask you to tell me in order that I can start rearranging my personal affairs to be able to support myself in my old age and not become a burden on the state or on my children.

2. As stated in my two submissions, there have been two fundamental flaws in rent control since it was introduced some 25 years ago. The apartment or rental unit is controlled, whereas it is a particular segment of society which needs to be helped. I cannot conceive why any government, particularly an NDP government, would have laws in place which enable the wealthy, yuppies, doctors, lawyers, professionals, business executives, two-income families, Japanese businessmen, diplomats, etc, to live in subsidized housing. I imagine that as these groups are subsidized by the landlord and not the government, this reduces any ideological pain which might be felt.

My contention is that low-income persons should pay what the bureaucracy has assessed they can afford to pay and for the province to pay the difference between that and a fair market rent directly to the landlord. Social support of one kind or another is now so widespread in our society, and the social values have changed so much, that receiving such support is no longer a stigma but a right to be exploited. Adding privately owned housing units to the list of social supports would not upset anyone.

As a taxpayer, I am sure there would be enormous savings if all the social assistance assessment data bases were to be consolidated into one master computer file and client assessment organization. However, I imagine the bureaucratic turf wars and infighting which would result would be a sight to behold.

3. Rent control is inequitable because a small segment of society has to absorb the loss of income resulting therefrom. However, the reality is that rent control is a social assistance program and the cost should be borne by all society through the taxing systems. On the basis that rent constitutes 50% of a person's expenditure, then the other 50% is spent on items which are not controlled. Why, may I ask, should the landlords be singled out? Why do you not have the courage of your convictions and control rents for grocery stores, the cost of food, clothes and beer, which is directly under government control? The answer is simple, is it not, gentlemen? There are only a few landlords and the public relations machine has been cranked up to make ogres of us and make us ready for the plucking.

4. It has been reported in the press that publicly owned low-income housing costs the taxpayers of the province some $20,000 per year per unit. Funds to build these units come from government-guaranteed loans from banks and other institutions. Do you control the interest they receive for the moneys lent? If not, why not? Why only landlords? This is what it always comes back to -- only landlords.

I now come to specific points regarding Bill 121, namely:

1. Application for operating expense increases in excess of the annual rent increase announced by the Minister of Housing are limited to property taxes, heat, electricity, water, cable TV and mortgage interest rises. There are other operating expenses, such as the cleaning of common areas, lawn cutting, snow plowing, garbage collection, etc, which should be included. Garbage collection, for instance, has been subject to enormous increases in the last 12 months as dumping charges have been imposed by local municipalities. I recommend that the list of costs which can be included in the operating cost review should include the above-listed items.

2. In my opinion, capital costs are incurred when the following types of replacements are made: taps, vinyl floors and subfloors, kitchen countertops, toilet bowls and tanks, hot water heaters, furnaces, storm windows, roofs -- shingle and flat -- stoves and fridges, chimneys and brickwork, etc.


Many of these replacements are a function of age of the building. Many are a function of the attitude of the tenant towards the landlord's property. While it may be possible for the landlord of a new building to save the capital repair portion of the rent increase for the inevitable day when replacements have to be made, owners of older buildings are not able to do so and must do the necessary work now.

The cost of doing identical capital repair work is the same regardless of the rent being paid. There is some premium for the cost of labour and material in Toronto, but basically, as far as I can determine, costs are the same throughout the province. Rents are higher in Toronto because of the cost of land on which the rental building stands. With higher rents the 2% incorporated in the annual increase and the 3% which may be applied are far greater than for a lower rental unit. This is grossly unfair and impractical. This is repeating what the previous gentleman stated so eloquently.

I recommend that for buildings over 20 years old the capital repair cost increase which can be applied be two thirds of the cost above 2% per annum with the balance third being rolled over the next year. The method of calculating the capital cost allowance would be similar to the manner detailed in the 1986 law.

In support of this recommendation the situation in my building is detailed below:

1. The building was built in 1959 by a very reputable builder.

2. The gross rent for 1991 is approximately $70,000.

3. The capital repairs in 1991 include: replacement of taps, apartment 201, $85; replace kitchen countertop, apartment 204, $383; replace taps, apartment 204, $103; a new fridge, apartment 303, $850; repair fridge, apartment 204, $345; painting, apartment 303, $2,100; replace bathroom floor, apartment 303, $125; replace toilet, apartment 303, $250; paint bathroom, apartment 202, $226; landscaping after new drains installed in 1991, $500; repair parking lot, $300; repair bathtub drain, apartment 302, $166; replace kitchen taps, apartment 104, $165; replace insulation and walls in bedroom of apartment 104, $400; paint bedroom, apartment 104, $300; rebuild chimney and new flashing, $1,100; replace tiles with fibreglass tub surround, apartment 201, $500; new fridge requested by tenant, apartment 203, $850, for a total cost of $8,726.

This does not include my labour; say, 150 hours -- I hope I am worth $15 an hour -- for a total of $2,250.

In summary, the gross rents are $70,000; 2% of the gross is $1,400; 3% of the gross, if approved, is $2,100; total capital cost recover is $3,500. That is only 40% of the actual cost incurred. The actual cost incurred in capital cost expenses is 12.5% of the gross rent. That is a typical year. I have not done these actual things in order to come here and tell you about it. That is what goes on year after year in a 30-year-old building, and your rent increase does not cover it.

Now, what do you want done? Do you want the building to fall down in due course or do you want this building to be maintained? It is as simple as that.

4. I believe the law could be adjusted to eliminate unwarranted capital improvements such as fancy marble entrance halls or Thermopane windows and some of those items.

That is my submission.

Mr Tilson: I would like you to comment on the government's policy to increase non-profit housing and co-op housing. As you know, the operation of it is substantially subsidized by the taxpayer. In fact, non-profit housing is completely funded by the taxpayer. I do not know how the non-profit housing scheme is affected in your area and what effect it is having with respect to private enterprise. We have had testimony that it is even going into competition against private enterprise and causing very serious problems, particularly in the Windsor area. Do you have any thoughts on that?

Mr O'Nians: I know some of the rents are now becoming of the same ilk as private rental. It seems to me that some of the individuals who are going into subsidized housing could very well afford to pay to be in private rental housing. There is one instance I know very well because it is on a corner. The guy has a lawn mowing service. He has half a dozen garden tractors and pickup trucks and trailers outside his place. He has guys who turn up at 7 o'clock every morning and off they go and mow lawns all day. It does not seem to me that guy needs subsidized rental housing.

Ms Harrington: I want to make a couple of points to you. First of all, the people of Ontario do need and want consumer protection with regard to their rental housing. That is a fact of life and it has been so for 15 years or so. Also, we do believe there should be realistic increases in your rent for the owners of the building to ensure that there is a fair return and that the buildings are kept in good repair. We are working on that. As you know, we have protection and stability of rents on the one hand, and the need for repair and maintenance and fair return on the other. It is a balancing act and it is very important for us to do this correctly.

I just want to point out that many landlords have not been to rent review in the past, that 80% in any one year do not go to rent review. I also want to point out that increases such as the taxes, if they go up, are reflected in the increase in the guideline, which depends on inflation. I think you will agree with me that responsible landlords like yourself plan ahead from year to year and try to minimize their costs and do the necessary repairs on an ongoing basis, which I think you have illustrated.

Mr Tilson: On a point of order, Mr Chairman: I have observed Ms Harrington throughout the afternoon and in other cities and in other parts of the hearings here in Toronto, where she will make simple statements inviting the individuals to respond to that. This individual has just indicated he would like to respond to that. She uses up her entire time with a speech. I think it is incumbent upon the Chair, if she is going to do that, that time should be given to allow these people to respond to these statements, because she is not doing that. She is just going on and on and not allowing these people to respond. My point of order is that if you are going to allow her to do that, you cut her off and allow these people to respond to her statements.

The Vice-Chair: Unfortunately, the Chair cannot decide what an individual member does with her time, but certainly I think that we all have to understand that all members of the committee would like to participate, and really the purpose of public hearings is to hear what presenters have to say.

Mr O'Nians: Excuse me, could I respond first?

The Vice-Chair: I am sorry, I cannot allow that.

Mr Sola: Perhaps you can use part of the time in responding to my question to respond to Ms Harrington's. On page 4, you have a list of items that you call capital expenditures that I think many people would classify as maintenance or repair. I wonder how you differentiate between the two and how you would accommodate that in your budget.

Mr O'Nians: For instance, taps wear out. There are a limited number of times they turn off and on. The threads become worn and loose and the tap becomes loose. When the tap set requires replacing, in my opinion that is no longer maintenance, that is replacement. If a toilet bowl is cracked, for whatever reason, that is a replacement. You cannot repair it. That is a replacement. I do not consider that normal wear and tear, particularly if it is caused by the tenant. In my judgement, anything that needs replacement is a capital expenditure, anything that requires substantial repair is a capital expenditure, anything that can be expected to have a life. I have repaired the parking lot. That has a life of five years. I do not consider that to be a maintenance item. I consider that to be a capital repair.

May I also take you up on your point and reply to the point you made. I do not recall the people of Ontario saying they wanted rent control. What they said they wanted was affordable housing.

The Vice-Chair: The time has expired. I appreciate your coming today.



The Vice-Chair: The next presentation is from Dawn Miller. Good afternoon. You, like the rest of the presenters, have 15 minutes to make your presentation to the committee.

Mrs Miller: I appreciate the opportunity. I have been listening to some of the previous speakers. I can only speak for myself and the 12 units that I am responsible for, 15 adult people. We bought the building in 1987. It had never been to rent review. An elderly gentleman was retiring and he wanted to retire in peace, so that was the reason he sold. We were just married and we wanted to invest. We were planning a family and were trying to plan for our future.

The building was very run-down. The tenants were heating their apartments by opening their oven doors. That was the first thing they all came and told me. There was no hot water. The appliances were so old that they could not be serviced. Painting burnt, torn flooring -- that sort of thing, just generally run-down.

We had a maintenance plan, a five-year plan worked out. We took care of the heating problems. No more scorched kitchen cupboards that winter. The hot water problem was solved. The worst of the appliances were repaired, repainted and we fixed the floors that were actually a walking hazard.

Unfortunately, my roof blew off in the rains. Kitchener had very bad rains in July of 1990. The roof went over to the neighbours. Eight of my 12 bathrooms collapsed. It took a month, with $27,000 that we had to get a bank loan for.

My rent review application was frozen and the rents are frozen right now. They are at $378 which is, I believe, very fair for a one-bedroom apartment. I would just like to ask you people to take into account the small landlords who do not have access to great funds and might be suffering a little bit. I am personally caught in a little bit of a bind. I hope to see my way through it. This is my sole occupation and I am just hoping that my furnace does not blow or something like that, because I would not be able to handle it.

The Vice-Chair: Thank you. Mr Mammoliti.

Mr Mammoliti: Thank you, Mr Chairman. I will give enough time for my colleague. I just wanted to ask whether or not you had insurance when the roof blew off and whether or not you had insurance when the bathrooms collapsed. I would assume that the insurance would pick that up as opposed to you having to dish it all out.

Mrs Miller: I cannot honestly say, to tell you the truth.

Mr Mammoliti: That you do not have insurance?

Mrs Miller: Oh, I am sure we did.

Mr Mammoliti: Why you did not try and take that angle to the insurance company?

Mrs Miller: I cannot honestly answer that, I am sorry.

Mr Abel: This was a 12-plex you said that you had bought?

Mrs Miller: Yes.

Mr Abel: From your description, it was in pretty rough shape when you first purchased it, you and your husband. Is that correct?

Mrs Miller: The previous owner was there almost every day, but he was more of a handyman, and instead of replacing or fixing, he would tack things back together. But the major thing was the heat and the water problems.

Mr Abel: You were saying it was $378 for a one-bedroom. Are there any two-bedrooms?

Mrs Miller: No.

Mr Abel: They are all one-bedroom, so it is $378 per month?

Mrs Miller: Now, yes.

Mr Abel: And all of your 12 units are filled?

Mrs Miller: Yes.

Mr Abel: How much did you have to pay for your building?

Mrs Miller: I believe it was $345,000.

Mr Abel: What do you feel is a fair return on your investment?

Mrs Miller: Whatever I could get back from the bank. RSPs -- what do they come back at?

Mr Abel: No, no, the money you had invested in this building. What do you feel is a fair return?

Mrs Miller: In rent?

Mr Abel: Yes. In your investment in this building.

Mrs Miller: I think it would probably be around $405 a month rent, if that is what you are asking me.

Mr Abel: No, not exactly. I am sorry if I am not making myself very clear.

The Vice-Chair: If I could be helpful, Mr Abel, I understood the presenter to say a return similar to RSPs, I think. Is that not what you said? So that was her answer.

Mr Abel: Okay. Are you losing money on this investment?

Mrs Miller: We are more or less maintaining right at the moment, but we are not making money.

Mr Abel: I will pass to Mr Perruzza.

Mr Perruzza: I think Mr Abel was basically asking the kinds of questions I was asking. I know that every member on this side of the table is sensitive to this particular deputant and the kind of dilemma and problem that she faces. I know that she is in a similar situation to a lot of other small landlords that took over properties and that, for one reason or another, have found themselves in a difficult situation whereby they are just basically holding the fort. I do not think that anyone on this side of the table is -- or I have never heard them draw the conclusion or the inference that every landlord in the province is making large amounts of money on their investments and so on and so forth.

My question to her is: Given the legislative proposals that have been tabled, both in the house and the committee, what kinds of suggestions, concrete suggestions, would you be able to make to us that would enable small landlords such as yourself, who have found themselves in a difficult situation, to be able to address these kinds of issues adequately?

Mrs Miller: I would think there would have to be some provision for unexpected expenses such as this. It was not planned and it had to be done; we cannot leave it undone. I am not sure of the exact wording. Whatever it took to repair it, we should have some system of getting that back, or at least paying the bill; whether you want to put a cap on rent increases or give us two, three years to get it back, but at least to allow us some kind of recompense.

Mr Sola: I think I understood you to say that you are breaking even right now even though your rents are frozen at the moment. Is that correct?

Mrs Miller: Yes.

Mr Sola: When will you be refinancing your building?

Mrs Miller: I believe next year.

Mr Sola: So if your financing costs increase you will be going into the red if everything stays the same.

Mrs Miller: We are hoping to somehow unfreeze the rent application I have at the moment, but there are so many thousands.

Mr Sola: One other question. Has the value of your building gone down since you purchased it, has it maintained its value or has it gone up? Are you left any out in case you cannot refinance?

Mrs Miller: Right at the moment I do not think the apartment situation is very stable in my town. Everybody is waiting to find out what is happening. I have not been keeping up with the real estate brochures that have been coming to me through the mail. I do not know whether I can trust them as to true market value or not. I would not attempt to sell at this point anyway.

Mr Sola: In other words, you may be left with the prospect of bankruptcy if you do not get a chance to recoup some of your expenses?

Mrs Miller: It is possible, yes.

Mr Tilson: Where are your units, Mrs Miller?

Mrs Miller: In Kitchener.

Mr Tilson: Do you have any plans specifically for any capital improvements in the next few years?

Mrs Miller: Not at the moment, no.

Mr Tilson: Why is that?

Mrs Miller: Right now everything seems to have been taken care of, needed immediate concerns. We are thinking about doing our driveway. We might be able to patch it on our own without having to contract it out.

Mr Tilson: Do you have the financial capabilities of taking into consideration the provisions of Bill 121 to redo the driveway?

Mrs Miller: Possibly, yes.

Mr Wiseman: I am trying to dig a little bit into the finances of this. You bought the unit for $345,000. Did you finance the whole amount?

Mrs Miller: Most of it.

Mr Wiseman: When did you buy it?

Mrs Miller: In June of 1987.

Mr Wiseman: Okay. That is interesting. That is good enough. Thanks.


Mr Steiner: My name is Les Steiner. I am a lawyer and I am the principal of a company that owns four rental buildings in the province and manages a number of others. There used to be six, but two have been sold under the distress conditions that are cited in my submission which was made in November. I am enclosing a copy for you. In order to better use the time, I plan not to read it or read much from it, just perhaps update it and maybe highlight one or two points in it.

Unfortunately, what it talked about, early in its genesis in November of 1990, has in fact happened. Two of the three buildings that this case study refers to in detail have been sold under distress conditions. I will be glad to provide those figures either here or in another submission to follow up on this one.

I want to make a few comments in regard to the capital issue. By the way, this remark about 80% of landlords who have never applied -- I want to point out that about 25% or 20%, if we accept that figure, are people who have bought buildings since 1986 or 1987. I think that is a pretty important contingent part of the overall picture. One cannot run to the issue of those who were fortunate enough to arrive in a boat in this country much earlier than I did -- which was in 1957 -- and bought a building 20 or 30 years ago and have long ago paid for it. They are looking at these discussions with quite a different eye than those of us who went into what was supposed to be a superconservative type of investment post-1986 or post-1987 and are now finding ourselves quasi-expropriated by retroactive legislation.

The retroactivity is what my submission talks about. I do not want to dwell on it because the anger is difficult to control. But the retroactivity that was put into the freeze, and in the permanent legislation, is expropriation. It is expropriation without compensation, from a group of people who are unable to respond in any other way than by these talks at appearances or occasional demonstrations. I think I do not need to dwell on it. I speak about it in detail.

That is what caused the distress, that is what caused these post-1986 purchases to have become untenable investments in many situations, both with very small landlords and medium ones and perhaps even in some larger groups of units that were bought in such a way.

The simple thing about the capital issue that I want to perhaps capsulate is that it will become -- and these are simply words that came out of the thinking on the subject -- a perpetual warfare as to the definition of what is the minimum acceptable in a building. It will be a war fought between the landlords and the tenants with the referees being the municipal or perhaps eventually -- and I predict this -- provincial inspectors who will be another stage of bureaucracy to decide what has to be done. No longer will the argument be that the landlord wants to do it and thereby wants to abuse the system and pass through increases which were attacked in the past, I think justifiably -- the marble argument.

The future fight is what is the minimum that he has to do so that the municipality or, I predict, a future provincial body does not come into his building and take it away by putting it through taxes. That is what the fight will be over, minimality. It will be fought in the trenches of appeals to work orders, as I am already doing and others are already doing. It will be fought about retroactivity or what the municipality calls retrofit, such as better lighting for garages or higher railings for balconies. In a 14-storey building I have right now, all the railings at the two ends of the building are being ordered to be made four inches higher, because the building is a 20-year-old building -- not a very old building -- but the new building code requires this, so the city of North York -- and I am sure you heard all of this so I do not want to dwell on it -- is ordering it to be done.

So the future fight over minimal condition will be exactly the reverse of the past. It will be the landlords saying, "I do not have to do that, I should not have to do it," because he cannot pass it through, he cannot pay for it. What he is looking to is his next encounter with the bogyman who has become the mortgage lender. Because now, when you come up for refinancing, the work orders are the least of your problems. The next level of the problem is a new breed of bureaucracy.

We talked about municipal and provincial law. There is a whole new breed already making unbelievable amounts of money in the province and they are the private engineers. You cannot get a new conventional first mortgage unless one of these -- we call them rocket scientists -- comes into your building and finds whatever he can do. And remember, he is working for the mortgage company, for Canada Trust, for whatever trust company you apply to, so his buyer is not you. He does not care about you. His next job comes from that lender, so the rocket scientist tries to make a report that looks as terrific as it can in terms of locating all the problems.

We just got one today. Today was my first exposure to one of these things and it is ridiculously picky. It gets into issues that no inspector has ever concerned himself with -- no inspector. So far, the bill is $100,000. The lender's reaction to this: "Get it done before we talk further. My inspector wants this. I don't care that you don't have municipal work orders."

Or where capital repairs come out all of a sudden -- and that is all I want to concentrate on in this highly minimal time -- is this warfare which now has new vested interests coming into it, new bureaucracies, new players, ie, these inspectors who want this part of the turf for themselves -- and they are bloody well getting it.

Of course, they charge for every one of these inspections. It is the lender who does not pay and the landlord who does.


I am involved with three refinancings. In each case, right in the mortgage commitment, a long paragraph about an engineering report, "acceptable" etc. You cannot pass the cost through, so if it comes off the financing where does it come from? And we are not talking about the landlords, the 80% or the 75% who bought 30 or 40 years ago. Good luck to them; they were fortunate.

We are talking about the unfortunate souls, though many, who came into this picture under rules, rules that were printed. I am a lawyer and I read them. Maybe I was a fool to get involved, but I read them carefully and I knew, and I have to tell you that in none of the buildings, the 10 that I am associated with, did we ever make an application over 9.5%. This can be verified, and it is in my report as well. So we are not one of the, what I talk about, the abuse of the capital cost gain where in fact people really played it by the depreciation tables rather than necessity. Necessity is easy to decide -- what the inspector needs and wants.

What is a capital repair is also easy to decide. The Income Tax Act of Canada, the United States, and every country has dealt with that problem for 100 years. When you put in your tax return, you cannot deduct a capital repair, so the rules on how to arrive at this are 50 years old. We do not need huge expertise. The gentleman may be wrong, the earlier one, about what was or was not, but the rules are out there and they are out there with Revenue Canada if no one else.

So these repairs can come from retrofits ordered, unexpected situations that truly were not expected, garage falling, etc, simple neglect, admittedly, or what I call ma and pa neglect, where you have an old owner who really is a first-time owner and waited to sell and then said, "Let the new guy look after it." That is not so evil, but it happens.

Let me tell you about an interesting new one that I am involved with, because maybe that can show the idiocy of what is going on at the moment, hopefully not after your deliberations on the new law. Number 246 Farnham, at the corner of Yonge, this company I work with bought April of this year conditionally and has since been trying to get into public housing through an allocation, and it is being done through the Homes First society which has a number of projects successfully done, five in the city of Toronto, all non-profit co-ops. An allocation was impossible to this date for this building.

That is not unusual today, but remember this: The building has 92 units of which 86 are vacant and have been for over a year -- 86 of these units are vacant. That is at Yonge and St Clair. And the holder of the mortgages, the ABN bank from Amsterdam, one of the many foreign investors who are being gored by the retroactivity and by the new proposed rules and who are going back and telling head office -- I know ABN is, because I bought it from them through other investors on a power of sale. ABN is going back to Amsterdam and saying: "The mortgage is no good because they changed the rules. Guess what? They changed it retroactively, not forward like we do in Europe, but backwards as of October 1." That is what they are reporting.

In fact, the officer of ABN, the Canadian, who placed this loan on this building has been fired. Because here is what it is worth. Their mortgage is $3.8 million. There is another $1.2 to local investors, not big guys, little guys who give second mortgages, and the building is worth almost negative under the new rules, almost less than a dollar. How I arrive at this is simple. If you take it at full occupancy -- never mind the fact that 86 units are sitting there vacant for over a year, and since April since we have been trying to get an allocation to put this into public housing, they are sitting vacant -- but if they were fully rented the gross rent would be $578,000, net around $260,000, and the required repairs to put it into ministry standards, your ministry, the Ministry of Housing standards, engineering work has been done, is over $4 million.

To put it into municipal standards -- here is the other level of bureaucracy, not the engineering guy, just the municipal, because that is the lowest standard, because we are going to have three standards -- is over $1 million. The value of the building before it can be sold is simply the current standard, which is 10% on net income, ie, $2.5 million.

So there sits ABN bank telling its Dutch shareholders, "Forget about Canada," because they are at $3.8 million with the first mortgage. These were not speculators. This was a conservative European bank. And this building was not speculation for them or the owner who had owned it for 20-odd years. They are sitting at $3.8 million and what is being told to them by the experts is, "You're worth 10 times the net income, maybe $2.5 million, less $4 million if you want it into Ministry of Housing standards, or less $1 million to $1.5 million if you want it occupied, if you want the work orders cleared. In other words, it is more than bankrupt and you have more than lost your investment." Forget about the second mortgagors who are Canadians, forget that. But ABN is sitting there with a $3.8-million loan worth approximately $1 million, entirely caused by the retroactivity and the fact that there are no rules to accommodate large capital repairs. Because this building was not left vacant out of some machiavellian speculation; it was done under Bills 111 and 211 under the Rental Housing Protection Act.

It was to be part of a development with Centara, which is the city of Toronto's $300-million partner, as you all know. It was to be replaced offsite so that the building can be absorbed into the development. It was proceeding entirely under provincial law. It was not some landlord who vacated the building and said, "I'll just sit here and maybe all these guys will go away and then I'll have a building that I can rent for more money." No, it was done under the rules. And the ABN bank, in giving its commitment and the loan, and I was not involved in any of that, had lawyers who said, "Yes, Bill 211 allows you to replace these units offsite and absorb the building and, yes, there's no problem in leaving it vacant and that sort of thing."

There are still six tenants in the building holding out for some miracle, and they are actually opposing public housing because there is no payoff in that for them. You cannot blackmail Cityhome; you can only blackmail the landlord.

The Vice-Chair: Your time is very close, so if you would like to draw a conclusion for us.

Mr Steiner: The Minister of Housing has been personally contacted through Bill Bosworth, who is the head of Homes First, and knows about the situation, knows about the fact that 86 units are sitting empty, and the answer was: "We're running behind. We don't have an allocation, and forget the ABN, forget the vacancies, forget this building." So it sits there under power of sale, but there is no buyer. The ABN has yet to digest the idea that in fact $3.8 million under retroactive Ontario law is really more like $1.8 million.

The Vice-Chair: Thank you very much for your presentation today. Unfortunately, there is no time left for questions.

Mr Steiner: I would just like to say, if anybody is interested in this situation, my phone number is on my submission. I would be glad to get questions, and I hope to get them, by telephone, to see this thing proceed somewhere.



Mrs Harper: My name is Ruth Harper. I have spent much time considering what I should speak about today, and I asked myself, "What can I say to this committee so that all its members will understand what Bill 121 means to me?" I decided that I am not going to talk about the gross injustices of Bill 121. I am not going to tell you what I think about my government's plan of intertwining economic and social policies in my province. I decided that it would be of little use to show you financial statements which verify my ever-increasing loss position.

I never did answer my own question, because whatever I say I know will fall on the deaf ears of some people in this room, the ears of people who have no sense of fairness or justice, people who do not honour the commitments of government.

The present Ontario government may make a land claim agreement with the aboriginal peoples of this province, giving them a certain amount of land. Let us suppose that after the next provincial election, the government -- not an NDP government -- decides the agreement gave away too much land. The government tells the aboriginal peoples of this province: "Sorry, folks. The agreement is no longer valid. Give some of the land back." How do you think the aboriginal peoples would react? Would they not accuse the government of betrayal, of injustice, and would they not be right?

Some time in the future, the government may reconsider the guarantee given to Ontario Hydro regarding the power dam in Kapuskasing. Suppose some time in the future the government cancels the agreement, the guarantee. Would the workers feel betrayed? Would they feel their government had stabbed them in the back, and would they not be right?

In these two examples of retroactive change, I, a landlord, am one with the aboriginal peoples, and I, a landlord, am one with the workers in the paper mill, in that my government has betrayed me and my government has stabbed me in the back. Bill 4 cancelled orders, cancelled phase-in notices, cancelled applications, all cancelled retroactively. Bill 121 does nothing to alleviate the suffering of landlords whose orders and notices have been declared null and void.

In 1988, my husband and I and five other partners bought a 19-unit building that was built in 1913. After some time, we applied and received a low-rise rehabilitation loan of $100,000. In 1990, we received a conditional order allowing us to raise the rent by 25% if we spent $175,000 of our own money. Based on the conditional order, we arranged for the mortgage to be increased by $175,000. With a conditional order in hand, we felt there was no risk in giving a personal guarantee to the mortgage. All the tenants agreed to the planned work. The work was done from May to August 1990: new wiring, new plumbing, new fire alarm system, completely new bathrooms, completely new kitchens, new appliances, new tiling and drywall, new carpet. The new rents were to start January 1, 1991.

When passed, Bill 4 cancelled retroactively the conditional order. An amendment in Bill 4 allows a 15% increase, of which 5.4% is the 1991 guideline and 9.6% is for the capital work. The promised increase of 15.4% is lost for ever. The work is finished. The money has all been spent. We cannot give it back. The mortgage payments are now higher. None of this can be changed. But the government retroactively changed the conditional order which gave us the income to make the necessary monthly payments. We are now losing money and we will lose money for ever. Furthermore, our home is in jeopardy due to our personal guarantee of the mortgage. Bill 121 does nothing to change the situation.

Have any of the committee members invested their life savings in a business and given personal guarantees for the business? Have you considered the risks of entrepreneurship and proceeded carefully? Have you planned and studied the laws and policies of the business? Have any of the committee members faced personal bankruptcy because of retroactive legislation?

As businessmen, we looked ahead, considering all the possibilities, but we never thought of a guerrilla attack into the past. I am under attack. I am victimized because I am a landlord. I am punished for having the spirit of entrepreneurship that built this province, our province. I suffer because I am a small businessman. I have no stocks and bonds or art collection. I do not even have a savings account any more. It is all gone. I and hundreds of other small landlords are not going to survive. My government sees myself and other landlords, they see our demise and they do nothing through Bill 121 for us. My government buys tenants' votes and support with the economic ruin, through retroactivity, of landlords. I did not know that Ontario is becoming one of those countries where vote-buying is routine practice.

Earlier today -- and that is one reason I arrived a little bit late -- I was at the home of a couple. I just met this woman, but I had heard a lot about her from a mutual friend. Her name is Esther. For over 25 years she and her husband worked very hard to support their family. She was in hairstyling. He is a painter. They are not the fat-cat landlords whom some politicians call leeches in our society. They are what I would call very hard-working people. In 1987 they bought a 70-unit building. In May 1990 they finished $250,000 of capital work. They received an order for a 17% increase effective from October 1, 1990. Their mortgage was due in December 1990. Manulife gave a verbal commitment for a $1.65-million mortgage. They cancelled the mortgage commitment after Bill 4 was announced. Because of the retroactive changes, this couple could not get a new mortgage. The building was sold for $1.61 million under power of sale. This is the same building that was appraised in December 1990 for $2 million. Not all of the mortgage money was covered by the sale price, so the family house, on which there was a mortgage guarantee, was at stake. Today, at noon, that is where I was, because that is when the sheriff's notice to vacate became effective, noon today. They were given it on Thursday past at 1 o'clock.

I do not know if any of the members of this committee have ever been with a woman who has five children and who has lost her family home. It is not easy. The five children have lost the only home they have ever known. Retroactive legislation has given them no choice but welfare. But the family has lost more than their business and their house. Like so many of us, they have lost trust and respect for their own government. How does Bill 121 help this family keep their home? How does Bill 121 help anyone who has been punished retroactively? Bill 121 does not address the issue of retroactivity because my government wants to ruin me and landlords like me.

I implore my government to reconsider the unjust effect of retroactive change. Restore the faith and trust of small businessmen in their government. Demonstrate that your government does not need to buy votes. Give security to all minorities by not persecuting one minority. Show us that Ontario has honour, justice and fairness. I beseech you to give us our province unfettered by the tyranny of the majority.

Ms Poole: Thank you very much for coming today to tell us your story. I am afraid words cannot do very much for you in this situation. What you need is action. You are one of the victims of Bill 4 and you are in jeopardy of losing your own home and losing your life savings. What could the government do for those people in Bill 4 that would give you enough that you could reverse this situation and be able to survive? What would they need to do for you?

Mrs Harper: Many of us in this position were hoping that something in Bill 121 would address the retroactive cancellations. Of course, it can take various forms, whether it is reinstating increases, perhaps caps so that it would be increases over three years, something where people could at least manage. This is not a matter of making a profit; this is a matter of being able to make your monthly payments, utilities, mortgage and taxes. Unfortunately, in my own case we have everything on the market. This one building I spoke about, the offers we get, we would have to pay people. That is the one where the conditional order was cancelled. We have been holding our own so far, but it is not going to last much longer.

Ms Poole: Maybe the witness could just take a moment, Mr Chairman.

Mrs Harper: One of the reasons that Esther's position really affected me so much is that I know I am probably going to be there in three months. It is just so upsetting. She has been in that house for 18 years. I think I have been in mine for 12. How do you explain to little children? I do not know. We did not break any laws, we did not do anything wrong.


Mr Turnbull: You tell such a moving story.

Mrs Harper: I am sorry, I did not mean to.

Mr Turnbull: I understand. I feel as outraged as you do. You asked the question of the committee, how many of them had put their life savings at stake and taken risks heading up businesses. I came to live in this country in 1969 and I took those risks and I reaped the rewards. Sometimes things did not go as well as they should have, but I never ever believed that in this country we would have a government which would by legislation wipe out my life savings. I am absolutely outraged.

Quite frankly, there have been several occasions during these hearings that I have had to leave the room because I was so angry, after I had questioned some of the people about this legislation. I cannot believe the NDP does not understand this is the truth. I cannot believe they do not understand it. Maybe they subscribe to this idea of the greater good -- there are more tenants than landlords -- but it is absolutely wrong. I implore you, speak to every newspaper, speak to every television station and tell your story in the way you did it today, because I know it is the truth.

I understand the business you are in, but unfortunately we cannot seem to get the government to understand that what it is doing is spelling absolute ruin to people. I have explained to them that mortgage companies will not renew mortgages. They do not believe us. I asked for the representative of the Ministry of Financial Institutions to come and give evidence. They voted us down. They did not want that person heard. I am absolutely outraged. I would ask you questions, but I do not think it serves any purpose other than to say I am sorry and I am ashamed that we live in a province where we have this kind of treatment of anybody instead of having rent subsidies to help those people who desperately need it. We know there are people in society who need help. We should be helping them more. Instead, we try and grab votes with crass legislation which absolutely ignores the facts.

Mrs Harper: Thank you for understanding.

Mr Mammoliti: I am surprised that Mr Turnbull would speak in that way. I believe he forgot that his party introduced rent control originally and retroactively.

Mr Turnbull: George, you just do not understand, do you?

Mr Mammoliti: Mr Chairman, I hope this is not deducted off our time.

Mr Turnbull: Tut-tut and make a demonstration. You are driving this lady out of her property. You are taking her out of her home.

Mr Mammoliti: Relax, Mr Turnbull.

Mr Duignan: What about the three million tenants in the province?

Ms Harrington: He is out of order, Mr Chair.

Mr Turnbull: It was never done by legislation.

Mr Mammoliti: Maybe you should take that walk you were talking about earlier. Mr Chairman, just for the record, can you please rule him out of order?

The Vice-Chair: Of course he is out of order.

Mr Mammoliti: Thank you very much. Ma'am, I see that you are distraught. Believe me, we do feel sorry for the families such as the one that you have introduced to us here and given us an example of today. I know about that because right now I am going through the same thing with tenants in my riding who are forced out of their units because they cannot afford the rent increases that rent review, the Liberal legislation prior to this, has caused them. So I know what you are feeling and I know at first hand how families feel in this particular case. As far as answering that question was concerned, I thought it was important to let you know that.

Second, I want to just touch on a comment you made early in your presentation, that 15.4% is lost for ever. Can you just tell me how much that comes out to, very quickly, because I have another question? Roughly.

Mrs Harper: The rents are roughly -- because it was bachelors and one-bedrooms -- $325 to $400.

Mr Mammoliti: And the total figure, have you worked that out?

Mrs Harper: No, I did it individually.

Mr Mammoliti: When you invested in your building, was it a long-term investment, as most landlords have done?

Mrs Harper: Yes, actually it just happens to be very close to where we live. We thought it was wonderful because it was going to be so easy to go if there was an emergency, because it was so close.

Mr Mammoliti: Do you think that maybe 10, 15, 20 years down the road you will regain this 15.4% when you sell the building?

Mrs Harper: I do not know. Let me put it this way: I will buy you a pizza if we have it in January and we have not lost it. I am not being funny.

The Vice-Chair: Thank you. We appreciate your presentation.

Ms Poole: While we are waiting for the next presenter to get herself settled, might I ask the ministry for a point of clarification tomorrow? We have just had the situation of conditional orders raised before the committee again. Could the ministry please clarify how they fit into the Bill 121 scenario? Since they did have a 15% rent increase allowed, would they also be allowed an additional 3% on top of that for the two years, or are they simply out of luck? I would appreciate that information.

The Vice-Chair: I think I saw a nod of agreement.



Ms Donovan: My name is Mary-Joe Donovan. I am the chair of the East York Tenants Association and I am here to speak on behalf of many of the tenants of East York and elsewhere. Our members have expressed their opinions in the submissions they made on Bill 4, and I have another three that have to be photocopied and left here later. Many of our members have sent in individual briefs and I know one who has made a presentation here. Their opinions vary from outright rejection to total acceptance of this bill, but I think the majority of their thinking is in line with what I am about to express here.

I have read a lot of briefs. I have read a lot of material on this bill. I have attended a lot of meetings and had a lot of discussions and I have done all this in an effort to try to moderate my opinion, but unfortunately I was unsuccessful. There are three or four good things in the bill. Financial loss provision being left out is one of them, and a couple of other things you have already heard about. But I would have loved to come here and congratulate my friends and tell them what a great job they have done, but I am just not able to do that. Instead of praising this bill I have to query it.

The people who worked on it I am sure did so with earnest good intentions, but they were working at a disadvantage because they were steeped in all this old rent review garbage. They should have had a chance to go away and cleanse their minds and erase their memories of all of that before they ever started to write a bill on rent control, because this is not a bill on rent control; this is revised rent review. I am just really weary of the whole thing, as you can probably see. I am weary, I am disgusted, I am fed up, because there is a continuing injustice going on that has not been addressed.

Affordable housing is not addressed in this bill. This is not going to give us any affordable housing. Landlords and their spokespeople in the political arena have said, "Leave everything alone and the marketplace will solve all these problems." There are big buildings sitting half empty because the landlords refuse to lower the rents to the point where they are affordable, and they are not about to. They still want $1,200 a month even though nobody can afford it and they have a couple of hundred units empty.

There has just been too much vertical thinking. The disastrous legislation of the past has just been modified and adopted and used in this bill. What we really needed was some dynamic, creative, lateral thinking, a whole change of direction. I have a number of proposals that I could make in this regard, but I cannot give you anything but the bare bones of it and of course it would likely be rejected out of hand if I did not develop it completely. That would take a couple of hours, and we do not have that much time.

Every person in this room and every person within the sound of my voice knows that landlords will not do anything unless to fail to do it would have a negative impact on their financial position. In an age of godless materialism, where the almighty dollar is the prime motivating factor, we are going to have to approach this problem in the light of that reality.

If a landlord can apply and justify an extra 3%, why should he get the 2% without any justification? For that matter, why should he get the inflation guideline without any justification? This bill, once again, is a make-work project for tenants. Why is the onus on the tenant to make sure that what should be, is?

They are going to be inundated with applications and meetings and having to make responses at the whim of the landlord. If indeed the inflation guideline can be disallowed for cause, why is it allowed at all? Why is the investigation not done prior to that?

What I would propose, if I had the time to develop this, is a whole new system. Bill 4 would have to stay in place for a couple of years. Get rid of a couple of things in it that should not have been there in the first place, and develop a whole new system to deal with this problem instead of just going on in the same old way.

I did not bother to type this out. I am getting tired of typing out nice, neat, eloquent briefs that people glance at and throw in the garbage. I want something done. I want to have a meeting with the Minister of Housing and I want to develop this whole proposal verbally. If I am given to understand that there is any real interest, if there is any hope that this government will refrain from its obduracy and do something constructive about major revisions to this bill, then I would be very happy to put a hundred pages of typing on the table.

In order to implement what I am alluding to, the rent registry would have to play a very important role. The rents should be checked back to 1970. This is just silliness. There are all sorts of illegal and inflated rents there that should not be there, and they are being added to every time there is a guideline increase.

There are a few things I would like to say about the procedures. In the first place, no rent should be increased until 30 days after the order has been given. The first rent date that falls after 30 days should be the date of the increase, and it should be in the order.

The tenants should be given an opportunity to make their information known in advance of an increase, not have to turn around and fight the landlord at every turn to prevent an increase or to recover an overpayment of rent, all of these things that go on and on. Tenants go to work and they work hard all day; then they have to come home and deal in an ongoing way with all of this stuff.

I think that sympathy for weeping landlords is a lot of bull. I feel just as sorry for people who are having difficulties as anybody else, but let's get real here. What about the thousands of tenants who are too exhausted and disheartened and overburdened with all of this garbage to even speak on their own behalf, let alone cry? They just go plodding wearily along wondering whether they are going to have enough money for food after they have paid the rent.

The main thing I want to say is that this bill has to be changed. It is certainly not acceptable the way it is. It does not do what it is supposed to do. The injustices remain. The bureaucratic nightmare remains. Every time I make a proposal for some really significant things that would benefit tenants, I am told, "Oh, that would be a bureaucratic nightmare." I do not know of any worse bureaucratic nightmare than we have been putting up with so far.

Mr Rae in his victory speech referred to the fact that it was a humbling experience. I think it is time for him to show a little of that humility that he gained through that experience and have the courage to abandon this bill and start from scratch and do the thing right while we still have the opportunity to do it right.

This is a dark world. It is full of greed and corruption. It is up to Premier Bob to be a ray of light for those who dared to hope when they elected him.

Mr Perruzza: Have you tried to contact the minister?

Ms Donovan: No, I have not spoken to the minister yet. I hope that through the good offices of Mrs Harrington I maybe will be able to have a one-on-one discussion with the new Minister of Housing. I did speak to her briefly at the United Tenants of Ontario conference and we had some enlightening thoughts to share at that time. But I was just mainly kidding her about getting back into cabinet. I did not know they were going to punish her by giving her this Housing ministry.

Mr Perruzza: So you have not tried that venue. That may be something that will happen. My other hope is that you would put your ideas down on paper and get them over to either Ms Harrington or somebody from the Ministry of Housing, because I am sure they would be weighed. I know that part of this exercise, as my Liberal and Conservative friends will acknowledge, is that we are here to listen. If creative, innovative suggestions come forward on where we could strengthen our legislation, I think they would be welcomed by all parties and not just by the New Democrats on this side of the table.

I know that you were in the room when the former deputant made her submission, Mrs Harper, and she talked about a friend of hers who is about to be ejected from her home today. How would you respond to that, sitting on the other side of the fence? Is this something that you had envisioned? When this type of situation happens, how should we be dealing with it? Should we be just simply kicking them out of their homes, taking their homes away if that is what it comes down to, or should we be responding to these kinds of situations on a case-by-case situation and dealing with it in that way?

Ms Donovan: Everything should be responded to on a case-by-case basis when it involves family dislocation. This is really dirty pool because the landlords' lobby have gone out and combed diligently the whole province for two or three landlords who would come in here and weep all over the place and get your sympathy. Never mind about them. What about all the other ones who are laughing all the way to the bank?

These people deserve some help and some consideration but that does not change the basic problem here, and that is that we need affordable housing for the millions of tenants in this province.


Ms Poole: Mary-Joe, you seem quite different this time around than last time around. You do seem very disheartened. Can you just give us the bare bones of the new creative way you think it should be dealt with?

Ms Donovan: It is not possible. I cannot do it in two minutes. It would take me an hour. I would be very happy to meet with you and tell it to you one-to-one also, but until I know that the new Minister of Housing is willing to intervene, despite the need for cabinet solidarity and all that political garbage -- I do not care about that. We have to do something now, before it is too late, and if the Minister of Housing responds favourably to what I propose to her orally, then I will sit down and put it on paper. I do not want to spend all that time and effort putting something on paper that is going to go nowhere. If I see that I am getting a positive response to it, then I will put it on paper.

Ms Harrington: I would like very much for you to meet the new minister, and I will see if I can arrange that. Just another point of clarification. You mentioned your brief goes into the garbage. I would like to show you. These are Hansards and the record from April. I read your submission at length into the record. You have some powerful quotes, and thank you very much.

Mr Mammoliti: Mr Turnbull, no questions?

The Vice-Chair: Let's not tease the bears.

Mr Turnbull: Are you the Chair now, George?


Mr Miller: My name is Peter Miller. I live in Waterloo. I am a landlord and I am also a lawyer, which puts a different light on my perspective a little bit.

In my practice I deal with landlords and tenants, and I have had my most successes with tenants, because that is where the legislation is a very fertile field. I had an opportunity to listen in to a presentation on the committee three weeks ago, and on the way home I was very disheartened with what I gathered is the attitude of the government.

I have read through the Rent Control Act and the explanatory things. It is this thick, it takes hours to read. Even from a legal perspective it is a big minefield, and all I could find was that it seemed to be a very negative piece of legislation and a gold-mine for tenants who wanted their rents reduced. Every time I read further in the act, there was another section that, "If a landlord does this, we can freeze his rent or reduce it." There was never any provision in the legislation that if a landlord does something nice, he is entitled to a little reward.

The capital expenditure provision is a nice area for a lawyer to get very interested in, because the landlord is entitled to a capital expenditure if he replaces it at the right time. If he does it too soon, it is premature, it is disallowed. If he waits a bit too long and it breaks, it is neglect and it is not allowed. Where do you fit that nice thing, that it is now time to replace something, and this is the time you can get it?

There are caps on increases for landlords, but there are no caps on decreases that the minister or the ministry can impose on reductions. If they find there is a reduction in cost, the rents can go down 100%. That is unlikely, but that possibility is there. If the costs go up 100%, you get 3% extra. Where is the incentive for a landlord to do anything?

It seems that the Ministry of Housing is going to create another bureaucracy with inspectors and inquisitors, and every time they find something, the landlord gets hit on the head. There is nothing in here that ever hits a tenant on the head for creating the mess.

I personally had to deal with some undesirable tenants. The criminal courts threw one of them out because he threatened another tenant in the building. They therefore decided not to pay rent and I had to evict them. My superintendent helped them move, and he was rather upset, saying, "These guys get" -- between the man, the woman and her daughter -- "around $2,000 in welfare payments, disability benefits." They brag about the fact they do not buy food, they go to the food bank and get food hampers. They do not pay their rent. They left the place a mess. They would not let me show it to new tenants. It has now been empty for one month while we cleaned it up and tried to find someone to rent it.

When I read the legislation, if clients come and ask me, I will tell landlords to sit on it and keep the place clean and not do anything. I do not know where the housing area is going, and my view is that landlords are going to sit back and do nothing. They will follow the law and basically leave it there.

What I always find very interesting in rent control legislation is that the government always exempts its buildings from rent control. It cannot live with it, but the private sector has to live with it.

My building is in a lower-rent area and a lot of my tenants apply for subsidized housing, and on a regular basis I get calls from North Waterloo Housing Authority inquiring about the tenants who have applied. The staff who phone to ask have been very candid with me. They are screening the tenants. They do not want tenants who do not pay the rent, they do not want tenants who are messy and they do not want tenants who are a nuisance. If I tell them any of those things about the tenants, they get to the bottom of the list and I think that is where they stay. It seems that if the government is out to help tenants, it does not want the dead-beats or the ones who create the problems. These are the buildings that are not subject to rent control and the government can charge these tenants, once they are not subsidized, the market rent, and that the government determines on its own authority.

The other thing that really gives confidence to landlords is the letter from Will Ferguson, MPP Kitchener, which I have provided to the committee. I happened to find one on the floor in front of the mailboxes. When I read that, it says great, this is the MPP for tenants, not for landlords. He has actually told me about one ruse under the old system I had never heard of. As for the nice comment he makes, "Landlords will be provided with enough money to ensure their buildings are maintained," I fail to see how. If anything goes wrong and it has to be replaced, you do not get your investment back to fund the next one.

My main concern about the legislation is that it seems to want to insulate tenants from the real world that all home owners have to deal with, increased costs of everything, such as tradesmen. Nobody ever tells them, "Your taxes can't go up," or "Your tradesman can't charge you double what he charged you last week." My concern is, what about the rest of us taxpayers who have to subsidize something? Where is the money going to come from? I know this year, with the crunch in housing and lack of rent increases, I am not going to be paying as much tax as I did last year.

The way I see it is, if the landlord has no money, he cannot comply with the act, and the act says if he cannot comply with it, your rent goes down. It is a vicious spiral downward, and I have no idea how the government expects landlords to keep up their buildings to make them a nice place to live with the proposed legislation. Those would be my comments.


Ms Harrington: You tried to compare the Ontario Housing Corp with the private rental market and said that we could charge, I believe, whatever we wanted. Is that what you said?

Mr Miller: Yes.

Ms Harrington: I cannot quite fathom how you could compare the two systems of housing. In the Ontario Housing Corp there is no capital gain appreciated over the years. I just cannot see how you could compare them.

Mr Miller: I compare them on the basis of the government. If they want to raise their prices because their costs are up, they can do it. The private sector cannot do that. That is how I compare them.

Ms Harrington: I think you will agree that there is a very basic difference in that in the private market there is cumulated capital gain over the period of owning that building. I just think you have to acknowledge that.

Mr Miller: I also talk to tradesmen in my private life and business, and they always rub their hands in glee when they do a job for the government because it pays top dollar, so there is always increased cost in all those jobs.

Ms Harrington: Certainly we have to keep up to standards and hopefully pay a fair wage, and I would hope that private landlords will be doing that as well. I think my colleague also has a question.

Mr Perruzza: I did have a question, but one of the comments the deputant just made I guess excited my imagination and it is something I would like to pursue. It is when you say that when governments are about to award a contract -- is that a contract or a job offering? -- that governments generally pay more than what the private sector would pay. Do you have any examples of that, because everything that I have seen to date seems to suggest that governments get a far better rate from everything, from office furniture to computer equipment to telephone systems and so on. Where are we paying more than the private sector?

Mr Miller: You are comparing office furniture with work of tradesmen on an apartment building. I do not think that is a fair comparison.

Mr Mammoliti: A point of clarification --

The Vice-Chair: There is no such thing as a point of clarification.

Mr Mammoliti: You allowed a point of clarification earlier.

The Vice-Chair: That was because there was time.

Mr Mammoliti: On a point of order, then, Mr Chairman: In working for Ontario Housing Corp for 12 years and spending 12 years of my life there, more specifically --

The Vice-Chair: What is the point of order?

Mr Mammoliti: -- as a superintendent, Mr Chairman, in that particular area --

The Vice-Chair: Ms Poole.

Ms Poole: I am very glad Mr Miller has brought this letter from Will Ferguson, MPP, to our attention. In fact, I think they are cloning this letter for at least a number, if not all, their MPPs, because I have also seen them for Steve Owens and a few others. I would like to bring this to your attention, Mr Chair, because I think it subverts the work of this committee. I will quote you this paragraph:

"Here's how it will work. Landlords will only be able to increase rents above the guideline for substantial increases in property taxes and utilities, and for financing necessary repairs. But under no circumstances will landlords be able to increase rents more than 3% above the guideline limits."

It does not say in here that a committee is studying this legislation. It does not say that it is amenable to amendments. This government has let its agenda be known. They have decreed, "Let it be written; let it be done." So I do not know why we are wasting our time, Mr Chairman, and I thank Mr Miller for bringing this to our attention, because it is quite obvious that you have decided what will be and that is your message to the tenants, regardless of whether there can be amendments on either side to help tenants, to help landlords to live with this legislation.

I do not have any question. Thank you, Mr Miller.

Ms Harrington: Mr Chair, the first line says proposed legislation.

Mr Turnbull: Mr Miller, this question of public-funded housing is something which I am also interested in. I noticed in the last fall session the Ministry of Housing funded a so-called non-profit housing co-op in Scarborough where, if you were to factor it out, the amount of subsidy divided by the number of subsidized units, it was the equivalent to carrying a $235,000 mortgage. You could have bought at the time a new detached single-family home for less than that, and that was just the mortgage portion.

Do you not think it would be more appropriate if they were to spend that money on rent subsidies for people truly in need, which certainly my party believes, that we have got to help those people who are disadvantaged at the moment, that 30% of tenants who cannot afford what they are paying in rent now?

Mr Miller: I agree that the rent subsidy is the most appropriate, and I think the welfare system is there that could administer it at little additional cost.

The Vice-Chair: Thank you, Mr Miller, for appearing today.

Mr Perruzza: Mr Chairman, before the next deputant proceeds, I would like to have a point of clarification, please.

The Vice-Chair: From whom?

Mr Perruzza: From me.

The Vice-Chair: No, who are you going to clarify? Would you like to ask a question of the ministry?

Mr Perruzza: From the Chair.

The Vice-Chair: Of the Chair.

Mr Perruzza: No, that is all right.

Mr Mammoliti: I would, Mr Chair, from the Chair.

The Vice-Chair: Mr Perruzza actually has the floor.

Mr Mammoliti: I am sorry. Mr Perruzza, is it okay if I take it? I just want to ask him a point of clarification. I would just like to know, from the Chair, whether or not the Ministry of Housing, in its practices, would include tendering out on all maintenance issues. Would you know?

The Vice-Chair: That is not up to me. If you would like to ask the Ministry of Housing to tell us tomorrow, give us notice of that and I am sure they would be pleased to elaborate on their purchasing procedures.



Ms Body: My name is Jeannette Body and I am chair of the Parkdale Tenants' Association.

Mr Poesiat: My name is Bart Poesiat and I am an executive member of the Parkdale Tenants' Association.

Ms Body: In addition to our written submission, which we will be referring to at times, we have a number of other points that we would like to make.

First of all, the Parkdale Tenants' Association is the oldest area tenants' association active in Canada. It was founded in 1970 to respond to pressures on large tenant populations in the former village of Parkdale. Our membership is made up of tenants who are in homes, large apartment buildings, flats in divided houses and rooms in both legal and illegal rooming houses. Our mandate is to help tenants in the area to get organized, to better defend their rights, to lobby for better rights and to represent the opinion of tenants in the area in order to ensure that they be considered as full members of the community by different levels of government.

First of all, we would like to say that we really would have preferred a real rent control act, primarily because this was an election promise given to us by the NDP. In Parkdale over the past 15 years, various rent review legislation has had a devastating impact on our community. We have seen members of the community subjected to harassment, having windows replaced in the middle of winter, having to go down the hall to use the bathroom, having workmen constantly in and out of our apartments, all so that the landlord could increase the rents legally. Of course, the final indignity: So many tenants at the end of the process have lost their homes because they could no longer afford the rent.

It has been a period of time in our community that has seen food banks become the way of providing food for a growing number of families because their incomes will not stretch to pay for the rent and for food. The past year has been especially difficult as rent review decisions that have been held up by the backlog have hit our community.

We think that if the government is going to present legislation in favour of tenants, it has to consider a number of things.

If work is done on a building, the landlord has improved his investment. When he sells the building it will get a higher price; thus, he can finance the work. So the concept of the tenant having to pay is, we think, wrong. The tenant loses money and the landlord has increased the value of his investment twice; once, because the work was done, and second, because the revenue from the building is higher. Until such time as the tenants get a share of the profits, we think they should not be paying extra for anything that enhances the profit of a building.

We do feel this legislation is a lot better than the RRRA. Some examples are the caps on capital expenditures, more stringent provisions for maintenance -- including rent reduction -- more stringent provisions for reduction in services, provisions against key money, and the fact that a number of rent increases that we did not think were fair are no longer available.

One major criticism is that the Rent Control Act must be universal. We think this legislation will create three classes of tenants.

First of all, with the five-year exemption for new construction, we feel that it will be an élite class of tenants renting those buildings, so it does nothing to address affordable housing.

The second class will be the tenants who are in smaller buildings. We have gone into some detail in our submission about buildings of six units and under. We feel there is no proof to justify this, and we have not seen any research to justify categorizing those tenants separately.

The third class of tenants will be the ones who are in larger buildings. Those are the ones who have been hit in the past few years with major capital expenditures, and Bart is going to talk to that.

Mr Poesiat: I would like to go into a little bit of specific criticism of some of the features in this bill. As Jeannette has pointed out, we are somewhat disappointed that we are not dealing here with real rent control legislation. On the other hand, this bill is a vast improvement over the Residential Rent Regulation Act, which from the point of tenants whom we represent here was an unmitigated disaster.

In terms of capital expenditures, which is still a feature where landlords can get a cost pass-through, the list of expenditures is pretty exhaustive. Granted, there are some restrictions in terms of "unnecessary." In our experience, it is very hard to prove that an expenditure, apart from gold-plating a lobby or building a bowling alley on the roof or a new swimming pool, is really unnecessary. We have examples that abound in the Parkdale area where landlords in pretty slummy buildings put in video-equipped security systems and got hefty cost pass-throughs on that. That could still be possible here. Even though a building is run-down, you could say: "Well, in terms of security, the door locks may be broken, but if we have a video-equipped security system, there we go. It is necessary." So that kind of thing would still be possible, we are afraid, but we hope not, under these particular provisions for capital expenditure.

Another thing we are a little worried about is that there is no definition of "neglect." Capital expenditures done as a result of neglect were something that was already there in the previous legislation, the Residential Rent Regulation Act. I can assure you also, as a case worker who works for Parkdale Legal Services, that it is very rare that we have been able to prove in rent review hearings and appeal hearings that a capital expenditure which clearly was a result of ongoing and deliberate neglect -- we have been pretty hard-pressed to actually prove that to the satisfaction of the appeal panel. There are very few cases. There are a few cases -- and this is not in Parkdale -- where tenants hired an engineer who did a full engineering report for thousands of dollars, but that is something that is pretty prohibitive for most of the low-income tenants in the Parkdale area.

We hope the neglect thing will be firmed up and that it will be a little clearer and not as wishy-washy as under the RRRA. We are worried that there will still be a hefty pass-through, although on a more gradual basis, for capital expenditures which may not be necessarily as a result of ongoing and deliberate neglect. It is pretty hard to define.

The other thing is the 3% cap. Obviously, from a tenant perspective, living and working in an area where tenants have been faced with rent increases of up to 80% and 90% for all kinds of capital expenditures which were not considered necessary, we are happy with the 3% cap. It is better than nothing. But a 3% increase on top of a guideline increase can still go on year after year. A landlord could phase in his capital expenditures; there is the carryover for the following year in large buildings, and for the next 24 months for the smaller buildings. Also, what prevents a landlord from applying again and again? Tenants could still be faced with rent increases in the range of 8% or 9%, depending on the rate of inflation, year after year. That is precisely something that has to stop from the point of view of affordability for tenants, most of whom are forced -- they have no choice -- to live in apartments and live in the private sector. People have no choice. They have to live there or on the street. You are still going to see the same effects as what is happening now, especially in the Parkdale area: three or four families living in a one-bedroom apartment because they cannot afford to rent, which again will impact on the building.

The other thing is that there is some kind of division between the tenants in smaller buildings and the tenants in larger buildings, because tenants in smaller buildings will have a 24-month carryover on the capital expenditures and tenants in larger buildings only 12. We really cannot figure why.

Another thing is that we think a capital reserve fund is something the government should have looked at more seriously. We feel that a capital reserve fund, in terms of rehabilitation of the housing stock, would have proved to be a viable solution. I will not go into the details of a capital reserve fund -- I only have a few minutes -- but it is something that should be looked at. It is something that landlords and tenants pay into -- tenants as part of their rent increases -- because with the rents going up like this, we will still have a crisis situation.

The other thing on the capital expenditures is that we wonder what has happened to the cost-no-longer-borne provision. Even the RRRA had some vague cost-no-longer-borne provision which was never effective because, I guess, the law did not last long enough. But basically, it is that when a capital expenditure is paid off, the rent comes down again. What is the point of paying for a capital expenditure in rents? Let's say a landlord replaces refrigerators, and eventually this is paid off. Here, it stays in the rent for ever. It is the ratchet effect. The rent goes up and up, even though the capital expenditure is paid off; it never goes down. In this bill, I see nothing about "cost no longer borne."

The other feature that has to do with capital expenditures and new services and facilities is that there is a provision that on the tenant's consent, an application can be made by both the landlord and the tenant that certain capital expenditures can be done in an individual apartment or several apartments, and that the rent there goes up. We see that as having quite a few pitfalls. A tenant can be convinced by a landlord, for instance, that his apartment is going to be made nice, much nicer than his neighbour's. Sure, he is going to pay $20 more rent in a month, but what the heck, he is going to have a nicer apartment. Well, that apartment will be less affordable. What about the next tenant who is poorer and who comes in there and cannot afford that? You are going to have a series of apartments which, through a buddy system with the landlord, are going to be less affordable than others. We have some real concerns with that.

To some extent we believe that the provision in this act for tenant applications for rent reduction is somewhat of an improvement. But we see some problems there, too, especially in terms of inadequate maintenance. That is badly defined.

Finally, the maintenance provisions in this act are an improvement, but we have some problems with there still being a reliance on city work orders, and we have had a bad experience with the city of Toronto. I am not making any bones about that.

There is a provision that government inspectors for the Ministry of Housing will be hired, and that is good, but it does not say how many. Is it going to be two? One for all of Ontario or is it going to be 30 or 40 or 100 or 200?

Those are our concerns. I could come out with a few more. There are more offences with fines in this act than before, and that is a good thing. But we still hope there will be more proactive enforcement of this act; for instance, in terms of unlawful rents, which will be a big problem and always has been. Thank you very much.


Ms Harrington: I will directly take back your concerns with regard to the maintenance, the capital reserve fund, the costs no longer borne and the consent provisions, plus the other things you mentioned.

I wanted to talk very briefly about your very first paragraph. You said that tenants should be considered as full members of the community, the whole idea, and this was mentioned earlier today, of changing some basic things in the way people are looked at in our society. A person earlier today mentioned that traditions change very slowly. It is very difficult. Slavery is gone. The status of women has changed in our society. I was trying to explain this change in the landlord and tenant relationship to 40 landlords in my own riding of Niagara Falls, and they laughed.

Ms Poole: Thank you for your presentation. We certainly share a number of the concerns you have raised. I would tell you for your own information that on August 1st I asked the Ministry of Housing for a definition of both "inadequate maintenance" and "neglect." To date, that has not been forthcoming. But I am quite optimistic that tomorrow, after four weeks, it will be provided so we all know what we are working with.

Your points about the double guideline are well taken, costs no longer borne. The question I would ask you about is your comment on having rent controls universal. I suspect here you and Mr Miller, for very different reasons, would actually agree; Mr Miller because he thinks landlords should be on a level playing field with the public sector, and you because you feel that public sector tenants deserve the same protection. When you are talking about extending rent control to cover subsidized housing, are you also referring to co-operative housing or would you exempt that?

Ms Body: No, that would be exempt because they already have control over the setting of their rents.

Ms Poole: Okay, so, it is non-profit subsidized but not co-operative. Thank you.

Mr Turnbull: It seems to me the statistic in this province is one third of all tenants cannot afford the rent they are paying now. From what I understand of Parkdale, there is probably an unusual concentration of those people who have difficulty affording it.

Mr Poesiat: Yes.

Mr Turnbull: I understand that tenants are concerned about affordability and they want, obviously, the best deal they can get. The Conservative position is that we would target those people who cannot afford their rent at that 30% and directly subsidize them. What you would do is, in each community you would identify what a reasonable rent level was relative to vacancy rates and you would make sure that you topped up their income. It seems to me that would be a more humane way of doing it. But the NDP has a lot of difficulty with it because they say we are giving them money and it just flows through their hands into the hands of the landlord. Could you just comment on that, about helping those poor people?

Mr Poesiat: You are talking about shelter subsidies?

Mr Turnbull: Yes.

Mr Poesiat: We have a lot of problems with shelter subsidy because shelter subsidy would presumably operate in a non-controlled rental market. In a tight housing situation, the rents would go up and up and up, and the shelter subsidy for a large segment of the tenant population would have to go up and up and up as well, which indeed would turn a great deal of money from the public purse into the pockets of landlords.

Mr Turnbull: There is a great deal of money from the public purse being spent on public housing now.

Mr Poesiat: Yes, that is true. But public housing -- and that is my next point -- creates more housing. We are not convinced --

Mr Turnbull: It is 150% the fault of the private sector.

The Vice-Chair: I am sorry, but we have to limit your presentation. Thank you very much for appearing today.

That completes the work of the committee today, but I would like to remind members that tomorrow we start at 10 o'clock in the morning and we have a working lunch and sit through till 6 o'clock tomorrow night. It will be a rather long day.

Clerk of the Committee: Only till 5 o'clock.

The Vice-Chair: Only till 5 o'clock, I am told. The Chair, again, will have to control the times very carefully or we will get very much behind.

Mr Turnbull: Mr Chair, just one suggestion, in terms of Thursday. We are not due in Kingston to start sittings until 10 in the morning and we are going through to 6 or 5 or so. Would it not be more sensible for us to schedule those later in the afternoon between 9 and 10, and then get on the road that little bit earlier? For those people who have to fly to different places, it would probably help.

The Vice-Chair: I have no difficulty with that suggestion if it is the will of the committee, unless anyone else has a problem with it. But I would remind members that these people have been scheduled for the later time. If they cannot find time in their day to come earlier, then we certainly should stay and hear them. But are there any objections to a rescheduling if that is convenient to the presenters? No? That is fine.

Mr Duignan: If it is convenient to the presenters and if the last person scheduled at 5 o'clock cannot make it, we should stay with this.

The Vice-Chair: That is fine. I think we have agreement.

The committee adjourned at 1806.