Tuesday 12 February 1991

Residential Rent Regulation Amendment Act,1990, Bill 4

Concrete Restoration Association of Ontario

Federation of Metro Tenants' Associations

Co-operative Housing Association of Ontario

Afternoon sitting

Ontario Home Builders' Association

Michael Walker, 221/265 Balliol Street Tenants Association, North Toronto Tenants' Network

South Etobicoke Legal Services, Lake Promenade Tenants' Association

East York Tenants Association

Provincial Building and Construction Trades Council of Ontario, Council of Ontario Construction Associations

Simcoe County Tenants' Association



Acting Chair: Mahoney, Steven W. (Mississauga West 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)

Mancini, Remo (Essex South L)

Murdoch, Bill (Grey PC)

O'Neill, Yvonne (Ottawa-Rideau L)

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

Turnbull, David (York Mills PC)


Conway, Sean G. (Renfrew North L) for Mr Mancini

Cleary, John C. (Cornwall L) for Mr Brown

Ferguson, Will (Kitchener NDP) for Mr Duignan

Mahoney, Steven W. (Mississauga West L) for Mrs O'Neill

Owens, Stephen (Scarborough Centre NDP) for Mr Drainville

Poole, Dianne (Eglinton L) for Mr Scott

Ward, Margery (Don Mills NDP) for Mr Bisson

Wilson, Jim (Simcoe West PC) for Mr Turnbull

Clerk: Deller, Deborah

Staff: Campbell, Elaine, Research Officer, Legislative Research Service

The committee met at 1009 in room 151.


Resuming consideration of Bill 4, An Act to amend the Residential Rent Regulation Act, 1986.

The Acting Chair (Mr Mahoney): I call to order the meeting of the general government committee. Our Chairman is unfortunately tied up in his riding and cannot be here this morning, so I will begin the meeting. We have a number of deputations and we have fairly strict rules. We want to stay to the time as close as we possibly can. We are about 10 minutes behind schedule already.


The Acting Chair: Our first deputation is the Concrete Restoration Association of Ontario. I ask that group to come forward to the table in front of the committee. We have set aside 20 minutes for your presentation and then 20 minutes for questions by the committee. It is now 10 after 10. We will give you until the half hour to make your presentation and then we will go to questions. Perhaps you could begin, for the purposes of Hansard, by introducing yourself, your lead presenter and everyone who is with you at the table.

Mr Eckardt: I am Ian Eckardt, president of the Concrete Restoration Association of Ontario.

Mr MacKay: Bill MacKay, with the Concrete Restoration Association of Ontario.

Mr Litvan: Gerard Litvan from National Research Council.

Mr Savasta: Guy Savasta from the Concrete Restoration Association of Ontario.

Mr Eckardt: The Concrete Restoration Association of Ontario was established in 1985 in order to facilitate a new industry trying to solve a new problem. The association is made up of contractors, materials suppliers and engineers specializing in the restoration of building structures.

Specifically, we repair deteriorated parking garages, roads and bridges. We work for governments and the private sector in protecting Ontario's infrastructure. There are 39 companies in our association. Up until the tabling of Bill 4 we accounted for approximately 1,500 to 2,000 jobs, including tradesmen, engineers and suppliers. Our industry does about $100 million worth of business in Ontario each year.

I want to make it clear that we are not here to argue for landlords' interests or for tenants' rights or to advise you on the appropriate level of rent increases in the province. Rather, we are here to advise you of the effects of Bill 4, not just on our membership but on tenants and their safety.

Ladies and gentlemen, Bill 4 is not in the public interest. Inadvertently it imposes a risk to public safety, and even though the legislation is temporary, its effects will not be temporary. Let me be clear: Unless this legislation is changed, people will be put at risk. It is that simple. I will elaborate on this very serious statement in my remarks that follow.

I will now briefly explain why concrete restoration in parking garages is needed.

Most deterioration of concrete arises from rapid rusting of the reinforcing steel in the concrete. This is caused by the progressive accumulation of salt in the concrete itself. The root cause of this problem is governments' clear roads policy and the application of road salt, which is carried by automobiles into garages. At the molecular level salt begins to penetrate concrete and commence the corrosion process. A ready example can be found on the Gardiner Expressway. The deterioration of that structure is caused by the same process of deterioration as in parking garages.

This is a new problem that was not anticipated or even imagined when many of the buildings we see around us today were constructed. Prior to 1978 the occurrence of such difficulties in garages was limited to perhaps one or two a year and then progressively the problem began to grow.

Much of the building industry did not know of the problem until 1983 and CMHC itself did not fully understand the destructive process that was at work until 1985. By the time the importance of the problem was realized, the salt content of most garages was well above the threshold level at which corrosion is caused. Municipalities only began to inspect for such deterioration between 1984 and 1986. Then by 1987 the Canadian Standards Association published a standard for the design, construction, and maintenance of new parking structures. In that same year a committee was set up by CSA to develop a standard for the restoration of existing structures and it is still meeting today.

In terms of the scope of the problem, I want to quote from a Ministry of Housing, Ontario buildings branch, July 1988 report on this phenomenon which indicates more than 3,000 structures are affected. I will make copies of this report available to you.

I quote: "It is now evident that deterioration of concrete parking garages is occurring due to the rapid corrosion (rusting) of reinforcing steel caused by the progressive accumulation of salt in the concrete. It is now generally accepted that the standards and practices applied until recently in the design, construction and maintenance of these structures are inadequate to ensure their satisfactory service and performance. As a direct consequence the majority of existing parking structures are subject to rapid and progressive deterioration, which may result in localized and unexpected structural failure unless repairs are carried out. Of particular concern are the roof slabs of underground parking garages."

Let me quote the report again: "Structural integrity is of prime concern in evaluating deterioration of garages. If impaired it must be restored and steps instituted to maintain the structure in a safe condition. Structural distress may be defined as a condition where one or more elements of a building are so impaired that the structure's ability to carry its designed load safely cannot be assured."

If the committee will bear with me, one final quote from this report so that you will fully understand the problem:

"The more experience accumulated, the more uneven results are found to be and less assurances felt about the effectiveness of treatment methods thought to represent `state of the art.' There is no simple answer to any one problem and since each parking structure usually has several different conditions of deterioration, prudent and cost-effective treatment demands resolution of the many interlocking technical and economic considerations."

I hope these quotes coming from the government give you an unbiased picture of the dimension of the problem and its cause. The government has committed millions to address the problem in public housing, and you, better than us, can assess these specifics.

I hope as well that you understand clearly from what I have said that this is not an issue of routine maintenance. No amount of minor maintenance, as opposed to rehabilitation, could deal with this phenomenon. Waterproofing, without major restoration, only prevents the ingress of more salt and water but does nothing to restore the integrity of the structure.

Because the salt-induced deterioration was not foreseen until the mid-1980s, the concrete in almost all garages contains salt and requires continuous periodic restoration or complete replacement. As well, because salt is not consumed in the corrosion process, the problem is and will remain with us throughout the service life of the building unless complete replacement occurs.

That is the problem. In terms of the solution, I am sure you can appreciate it is technical and complex and costly. It is major rehabilitation. I will not distract the committee by explaining the complexity of the restoration process itself, but for the purposes of your understanding let me advise you that the cost of a typical apartment garage repair ranges from $6 to $40 per square foot. Thus, for a garage with 150 parking spaces, the cost can vary between $360,000 to $2.4 million. A large part of this cost is for labour, as about 20 to 25 people would be employed on such a project for four to five months. In a very large complex, costs can run above $10 million or $20 million. In some of these jobs the equipment used, such as a hydro demolition machine, costs $1 million per machine.

Finally, and this is important, this work is not solicited by us. It is work triggered by an astute building manager or by a public official's inspection and followed up by a professional engineer's report.

In short, it is necessary work that must be carried out in the interest of public safety, or if it is not, garages will deteriorate and collapse and in severe situations where garages form the substructure of an apartment building, entire buildings could collapse.

I hasten to add that to my knowledge no garages have collapsed in Ontario which have in turn caused a building to collapse. We do not want to be alarmists about this situation, but we are concerned that Bill 4 may have a detrimental effect in this regard.

I cannot say tomorrow this or that structure will collapse, nor can I say that this will occur in six months or a year, but I can say that when we know of a risk, we must act to protect the public.

I hope this explanation clearly differentiates our work from the debate I have read about in the media over marble lobbies and kitchen countertops.

Our industry has evolved significantly in the last few years. As awareness grew, understanding grew and technical expertise paralleled this growth. In truth, in the early years we did not know the extent of the problem we were dealing with, but we learned. As we learned, an industry emerged and with it the skills and knowhow to do the job.

As an aside, those expensive hydro demolition machines I mentioned were first adapted to parking garage restoration use in Toronto. We now have about 17 machines operating in this area alone and we have developed an expertise in this province that is truly at a world-class level.


Recently our engineering and contracting ability has been successfully exported outside of Canada, and since we are dealing with a truly worldwide concern in terms of the deterioration of reinforced concrete, we have something to offer not only the citizens of the province but the rest of the world.

Let me now explain to you why Bill 4, which is supposed to be only a temporary measure, will in fact bring lasting harm to our industry and to tenants.

Within days of the announcement of this bill, over 42 major structural concrete restoration projects were cancelled by building owners and managers. As a consequence, 414 jobs have been lost.

Again, I want to stress for the committee that I am not engaging in idle rhetoric. I have read reports of some who have questioned the job loss figures associated with the legislation, saying the figures were overstated or due to the recession. That is simply not the case. These needed repair jobs were cancelled and these needed jobs were lost as a direct result of Bill 4.

The difficulty Bill 4 poses is that the jobs may not return, or if they do, return too slowly to meet the need. Our industry is changing, growing and dynamic. The requirement for our skills lies elsewhere if not here. Million-dollar equipment cannot sit idle for months. Where possible, our members are seeking work outside the province and outside the country just to stay in business.

More important, the jobs and the technical expertise that have been built up over the years have already started to disappear. The workforce too is mobile, as you must know. When a person with the skills of the people we employ loses his or her job, the individual is not going to sit by and wait for further legislative changes. He or she will move. Some already have gone and more will follow. Our workforce and its expertise are being scattered as we speak.

I hope the members of the committee understand this issue fully and I will welcome questions on it. The point I am trying to make is that if you arrest the process and stop our work at this stage, it will take years for us to build workforce expertise back and again reach the level of technical competence we had achieved up until the tabling of Bill 4.

Years will go by, and yet during those years the effects of salt on the reinforced concrete will continue to act and the deterioration of apartment garages will accelerate. In the end the costs of restoration will be even higher. So while you can freeze rents you cannot freeze chemical reactions. Therein lies another risk to public safety from this legislation.

This is particularly true of projects that have been left half-finished because no one can pay for them under Bill 4. For these projects and others that need attention, Bill 4 removes the owners' ability to manage or to protect the property and the tenants by removing the ability to pay for the work. In fact, under Bill 4 an incentive will exist to postpone the work since it cannot be paid for.

When the work must be done the cost will be higher, whether tenants pay through higher rents, government pays or landlords are forced to pay, and in some cases cannot, in which event the lending institution which then owns the property pays.

Please remember that postponement of structural repairs like this, besides increasing the cost, reduces the time period between repairs and the time at which the condition of the garage is a safety concern and thus introduces an element of risk.

Other effects of Bill 4 are job losses, as I have described, potentially the bankruptcy of some of our members, the loss of an Ontario-based export technology, and ultimately increased costs, as I have outlined, since the problems will get worse with time and time will be needed to rebuild our industry.

To conclude, we believe prohibition of our work through Bill 4 is inadvertent. We are not blaming government for this. We hope that with a fuller understanding legislators will recognize the need to get on with this important work in the interest of public safety. To do otherwise will put the public at risk and we cannot imagine legislators doing that.

In summary, will this committee recommend to the present government an amendment to Bill 4 allowing concrete restoration which is necessary to maintain the structural integrity of the apartment buildings to continue? As we understand the legislation, there is a provision to permit justified costs even during the freeze period, and we appeal to you to include this work in that category.

We welcome your questions.

Mr Cleary: Thank you for your presentation. I guess I have heard your concerns a few times before in the last couple of months, and some of that had hit very close to home because the apartment I live in went through part of this procedure last year. I know it is very costly. I know you made some recommendations in summary, but you must have some other comments you would like to make further than what you said there.

Mr MacKay: I guess the main point we want to leave you with today as you consider this and other briefs is that with a minor amendment to Bill 4 we are able to put back hundreds, possibly thousands, of workers who lost their jobs by allowing uncompleted projects to proceed as they were before Bill 4 came in. By doing that in a time of a recession it is not going to cost one dollar of taxpayer money. If the work is deemed to be in the public interest, the public safety, by structural engineers and whatever, that work, we feel, would allow our industry to get its people back to work, not lose the valuable skills we have built up over time. Then we can participate fully in the next step, which I guess would be the permanent legislation.

Ms Poole: Thank you for your presentation today. I apologize for not being here. Mr Tilson and I were at a news conference in our capacity as Housing critics for our particular parties, so we were a little late. I have had a chance to look briefly through your presentation, though, and I noted a couple of areas where I think you have provided valuable information to our committee. One is the area of minor maintenance versus major maintenance.

We have had the opinion expressed by some members of this committee that on something like underground parking garage rehabilitation, for instance, a lot of it could have been prevented if the landlord had taken proper care and maintenance of the parking facility. On the other hand, we have had expert testimony that says quite the contrary, that it is not a matter of maintenance but a matter that 20 years ago when many of these underground parking garages were built we did not have the appropriate technology, that it is a structural thing where the cement is corroding from within because of the salt and the moisture.

Am I to take it from what you have said in your brief that you agree with this expert testimony that it is a structural deficiency as opposed to a maintenance issue?

Mr Litvan: I think the parking garage problem is unique inasmuch as the whole industry, because it did not realize the consequences, did not provide adequate protection in the first place. We have to blame ourselves for that, but we did not foresee the amount of salt to be used and the consequences of that. It is not a question of maintenance. Now that the damage has occurred it is not a question of maintenance but a restoration and a full repair. In some instances it happened that the concrete was actually prepared with salt in it, a calcium chloride accelerator was put in it, so as long as that concrete stays there, the salt works itself It does not even require de-icing salt penetration. It is not a question of maintenance, or minor maintenance certainly, but a major rehabilitation required for that.

Ms Poole: Government members have said on numerous occasions that we are not to worry about things like this because this is temporary legislation. However, according to the bill itself, this moratorium could last up to two years. In that time I think there will be undoubtedly cases of underground parking garages which need repair, or else, in my opinion, there would be two options. One is that it would have to be closed down and not used by the tenants so that the salt could not continue to corrode, or the landlord can continue to make use of the garage and jeopardize the safety of not only the building but the tenants in it. Would this be your estimation, that even in a two-year period that there will be cases that occur where, if no money is provided for that rehabilitation, we will be in a state of jeopardy?


Mr Litvan: I think at the moment the majority of the garages are repaired. It is at the stage where the tenants or the users are complaining about leaking water and damage to their cars or their personal comfort. If the landlords are going to be immune to these complaints, then they will wait until, in their or their adviser's estimation, there is a safety problem. Now we are increasing the risk very much, because we are now going to the point where the repairs are absolutely mandatory from a danger point of view. It is only a question of misjudgement when a serious problem may occur, even a collapse.

Ms Poole: I think one of the other things you are implying is that if the repair work is allowed to go unchecked, the cost of the repair in the final analysis might be much greater than if it were dealt with in a more timely fashion.

Mr Litvan: There is no doubt about it. The repair cost is escalating on an exponential curve. From a technical point of view we are trying to impress everybody to make the repairs as soon as they possibly can. This is not only for public safety but also for economy. The sooner you do the repairs, the less cost and the safer it gets.

Ms Poole: The other area I wanted to explore was one you brought up in your brief, that is, the jobs that have been lost because of Bill 4. We have had presentations from union people, people who are in the trades, suppliers, as to the effect of Bill 4. This is an effect that cannot be blamed on the recession; it is something that can be blamed directly on Bill 4, because repair work, renovation work and restoration work will be halted. One point you have made extremely well, which not too many people have, is that the jobs may well not return.

It is very difficult for somebody who is in the business, if they have laid off their staff, if their business in fact sometimes goes defunct, to build that up when a year later the government says: "Okay, we've had a look at the long-term solutions and this is what we're going to do. Okay guys, you can go back to work now." Is that a real problem in that once those people have left because they have been laid off -- they might even leave the province -- once your business has been irreparably harmed, you may not be able to recoup? Do you see this as a reality or is this just a misstatement?

Mr MacKay: I think it is a definite reality and is a fact. We built up the technology and the expense over the years. Hydro demolition operators, even jackhammer operators, have a skill; these are both union and non-union people. You only have to drive around the city to see work that has stopped, garage roof slabs that have not been reinstated. The work has stopped, the men have left, and unless we get back to work we are not sure we are going to be able to attract these people and we are going to be that much farther behind. That is the problem with temporary legislation. Their expertise has been developed.

It looks like six months on paper, but it is not six months. There is a lead time involved in this type of work between the time of the condition survey, where the structural engineer has gone in and assessed what has to be done -- that project you see under construction today might have been in the works for a year and a half.

Mr J. Wilson: Thank you for the very clear and concise brief this morning. I want to say from the outset that we in our caucus would like to support your association in its bid to have these repairs as part of a necessary capital cost exemption or extraordinary operating cost in that section of the bill. I again bring to the attention of the members of the committee that the National Research Council itself, which is an extremely credible organization, is here; therefore, I believe it is quite true that these were unforeseen repairs a few years ago. But what is the extent of the problem in Metropolitan Toronto, for instance? You mentioned 42 projects cancelled and 414 people out of work as a result of Bill 4. What do you foresee in the immediate future in addition to those 42 projects?

Mr Eckardt: These were ongoing projects that were cancelled. The amount of work in the metropolitan area and surrounding districts -- we do not have a handle on it; we have not even scratched the surface. New things keep popping up on a daily basis. This problem is never going to go away. It is there on a daily basis. The repair will occur again. It is not something that is fixed today and eliminated.

Mr J. Wilson: What is the average age of the buildings you are working on and find yourself in?

Mr Eckardt: I would estimate that the average age of the buildings is 20 to 25 years old.

Mr J. Wilson: Do we have stats on how many buildings in the area are that age and will probably need repairs or projects started?

Mr Eckardt: In this report from the ministry there were over 3,000 garages that needed repair at that time. That could be 5,000 at this point. I have no idea.

Mr J. Wilson: I think your brief is refreshing in the sense that you have brought for the first time a very serious safety concern to the committee's attention. Before the government members have an opportunity to ask you questions, I might as well ask: Have you ever been accused of doing unnecessary repairs in this area either by the media or tenants or whoever might make those accusations?

Mr Eckardt: We are involved in structural rehabilitation. I do not call that unnecessary.

Ms Harrington: I would like to thank you for coming here and bringing this brief. It certainly gives a very good history of the changes that have taken place in your industry, and that construction methods have changed and the significant problems that, I gather, have emerged basically in the last five years in dealing with buildings that are 20 years or so old. I also want to thank you for coming to our Ministry of Housing people and explaining that to them.

I would like to assure you personally that I will carry your concerns forward, that this is something that is very serious. I would not in any way dispute the facts you have here and the testimony of your experts.

There are a couple of things I would like to explore with you. First, if there are safety concerns, and that is what you are talking about, basically, would you not agree that safety risk is the responsibility of the owner of that building?

Mr Eckardt: I believe that safety is the concern of everybody, that society should be concerned about the safety of our structures, not only our buildings but our roads. What we are talking about with Bill 4 is reducing the safety factor by delaying the repair. If somebody tells you he cannot pay you for the repair, you cannot do the work.

Ms Harrington: I understand. You are talking about the Gardiner Expressway. That is obviously owned by the government of Ontario and therefore we are responsible for the safety of that structure. The laws of Ontario also say that the owner of a building is responsible for safety, and that responsibility is a matter of law.

Mr Eckardt: Absolutely. I agree with that. The problem is that the government of Ontario has to have the money to fix the Gardiner, just as the landlord has to have the money to fix his building.


Ms Harrington: That is right. I certainly agree with you that these structures have to be fixed and they have to be ongoing. I have some photographs we all got yesterday of various concrete destruction; obviously, the problem exists in the structure. You do not just wake up one morning and see this. We certainly did not wake up at the end of November or the beginning of December and find all these problems. The owners are responsible all through the past years and the work has to be kept up.

The point I am getting at here is that I agree and we all agree that the work has to be done. I would like to ask you who should be actually paying for that work? Should it be 100 per cent the tenant, or is there some responsibility for the landlord to be paying too?

Mr Eckardt: In past history, I think the consumer has paid for the end project. Fortunately, we live in a country that has had a history of helping people who cannot afford to pay for the end product. To answer your question, I think the tenants who can afford should, and the tenants who cannot afford should be helped.

The Acting Chair: Two more members of your caucus have questions.

Ms Harrington: Okay, I will just finish off.

At present, the tenants have been asked to pay 100 per cent of the cost pass-throughs in the legislation we had in place. I am saying that the landlord, when that building is sold, does have a profit from that building and therefore he would have to put some of the money in for the repair and upkeep of that building.

I wanted to check with you. Your people, working for your organization, also do non-profit and commercial buildings which are still keeping your members employed in this province. Is this not true?

Mr Eckardt: That is correct. Yes.

Mr Mammoliti: I would like to go back to preventive maintenance again. I am not sure whether I really understood what you are saying, but I thought I heard that landlords cannot do anything when it comes to preventive maintenance when it comes to this problem. If so, can you clarify that. It is important to me. Can the landlord do something to prevent this problem?

Mr Litvan: I think we have to differentiate here. We have to see clearly that the garages have not been built properly, so we have a problem right at the start, just as the Gardiner Expressway, which the brief refers to, has not been built properly. Therefore, there is a problem.

What to do at what point; you can do a lot of things, but most of the garages, by the time we realized there was a problem, were beyond what I would call the maintenance situation but had to be repaired. When the steel rusts --

Mr Mammoliti: Let's talk about after you have finished your massive restorations. What can the landlord do to prevent this from happening again?

Mr Litvan: He has to clean the garage as much as he can with sweeping and washing and, very important, he should take care of all deficiencies as soon as they emerge.

Mr Owens: To continue on my colleague's point, you hit the nail right on the head. In several buildings I have been into in my riding there are tenants reporting leaks and the problems you addressed about leaking on cars. My question is twofold. First, approximately how long does it take to get from the leak stage to the stage we see on the front of the report? Second, of the jobs that have been cancelled "as a result of Bill 4," how many of those jobs were mandated by property standards work orders? Are they in fact a danger to the public safety if in the interim, during the moratorium period, they are not carried out?

Mr Eckardt: Which question would you like answered first?

Mr Owens: Let's talk about the period of time between a leak and actual falling down on top of cars.

Mr Eckardt: What we know today is that if you repair the leak properly today in a new garage, there will not be a falling down of a garage. Traditionally, before we realized what was happening, we used to put up an eavestrough, because the major concern was to keep the water off the car. So actually what we were doing was hiding the fact. We did not know what was going on, and it was not until major distress in the garage occurred that somebody said we had better do something about this and we had better investigate it a little bit more.

Mr Litvan: May I say something on this? There are several types. Sometimes the garage looks very bad because it is leaking and ponding and all that, but from a structural point it is not really dangerous. On the other hand, sometimes a garage is looking quite well and suddenly it turns out that it is a major, major catastrophe. He can honestly not really answer that question. Normally, it takes a certain amount of time between the onset of the serviceability problems and the major catastrophe. It takes years. On the other hand, it can happen very suddenly.

Mr Owens: About the number of jobs that have been cancelled, do you have enough knowledge about these jobs to speculate on which percentage are actual safety hazards or which number of those jobs were ordered by property standards departments across the province?

Mr Litvan: I personally do not have, because I do not know the details of these job cancellations.

Mr Eckardt: The majority of jobs this association carries out are through property standards work orders. The element of risk is something that I do not think anybody can measure. The only fact is that if you leave it, you are decreasing the safety factor.

Mr Owens: The question again, further to my colleague's point, is, why is a job left until the point where it is mandated by property standards because it is in fact a safety issue?

Mr Eckardt: I am not so sure that the property standards officer goes in and says, "This is a safety issue." A lot of these jobs are mandated for another reason. They go in and they want the painting upgraded or the lighting upgraded or leaks resolved in the parking garage and, upon further investigation of the engineer, they find that in certain areas the garage is deficient. So going from a relatively inexpensive repair or upgrading to a very expensive repair is a time period which the engineer then investigates.

The Acting Chair: Thank you very much and thank you for your presentation this morning. We appreciate the effort that you put into it and your coming here today.

Mr MacKay: This is of critical importance to our group, though. We need some indication, either from the committee or something, that will let us know whether we can get this minor amendment to Bill 4.

The Acting Chair: Sir, I am afraid we cannot give you that this morning. This committee will be dealing with amendments in clause-by-clause next week, and it is just not possible to deal with them one at a time as they come before us. As much as many of us on the committee would like to do that, that is not feasible.

But we begin our clause-by-clause on Tuesday of next week, and both opposition parties will be putting forward a number of amendments. I assume the minister will be setting a number of amendments out as well, although we have not seen them to date. I understand your anxiety, but that is about the best I can do for you this morning. Thank you for coming.


The Acting Chair: Our next presenters are the Federation of Metro Tenants' Associations, if we could ask for the changing of the guard as smoothly as possible.

Good morning. Welcome. We thank you for coming. We have set aside 40 minutes -- 20 minutes for your presentation and 20 minutes for questions from committee members -- and we will try to stick to that 40-minute time slot as closely as possible. We invite you, for the purposes of Hansard, to introduce yourself and your associate and to begin whenever you are ready.

Ms Hall: My name is Joyce Hall and I am chairperson of the Federation of Metro Tenants' Associations.

Ms McCabe: My name is Penny McCabe and I am the tenant organizer with the Federation of Metro Tenants' Associations.


Ms Hall: The Federation of Metro Tenants' Associations strongly supports Bill 4 as the beginning of the end of the current system that has been a disaster for tenants. We applaud the government for recognizing that quick and decisive action is needed. It does not nor is it meant to solve the problems with the current system but it gives us a two-year breathing space so that thoughtful consultation towards long-term legislation can take place.

The current system of rent review has hurt tenants in three ways. First, it has jeopardized the affordability of their homes by making them subject to unpredictable rent increases and in some cases has economically evicted them from their homes. Second, and at the same time, this legislated increased profit to landlords has failed to produce good maintenance. Third, the system is arbitrary, unfair and inaccessible. It makes the tenant vulnerable to 1,001 indignities and injustices, large and small, and has thus destroyed their peace of mind and their sense that they live in a rational and fair society where misfortune cannot just fall on them out of nowhere.

This loss of wellbeing and security is very real and, we believe, tragic. It cannot be quantified and calculated. We count and calculate in the course of this discussion. However, as a representative of those who suffer day to day from the injustices of the system, we want to remind you that what we are talking about is people's homes and people's peace of mind.

The affordability section: I am going to skip a few sections, but I will begin by saying that we are used to hearing that there is a lack of affordable housing, particularly in Metropolitan Toronto. I have heard in this room and in the course of this debate, "Let the government house the poor," or I certainly heard that implied. So let's establish we are not talking about a stereotypical, disadvantaged group we might refer to in the abstract as the poor. We are talking about ordinary people.

The base starting wage of an Ontario government employee, for example, is $437 gross a week. You, their employer, consider this a reasonable wage. This means that, given the usual definition of affordable as costing one quarter of one's gross monthly salary, this unionized worker needs housing at a cost of less than $450 a month.

Further, you consider a fair minimum wage to be $5.40 an hour so the minimum-wage earner is lucky to take home $200 a week. I think you would agree that this person needs affordable housing. Obviously the average two-bedroom apartment would eat up this person's income entirely.

Families need affordable housing, and I think you understand that issue. There is a statistic there that you might be interested in. But here is an issue that I do not think others have brought up. We hear in the news of shortages of certain types of workers in the Toronto area, most recently nurses and X-ray technicians, and the cost of housing is often cited as a factor in the shortage of these important workers. In fact, Toronto's viability as a centre of economic activity is threatened when workers move away because they cannot afford to live here.

There is a statistic here about seniors in Metro that I would like to bring your attention to as well, but the essence of my argument here is that we are talking about ordinary people, not just those we consider to be chronically disadvantaged. Rent control is not welfare legislation. It is basic consumer protection.

Fifty one per cent of the population of Metropolitan Toronto are renters. A very small percentage live in co-ops and non-profit housing. The rest find shelter in privately owned rental buildings. So the fact is that privately owned rental housing simply is the major supplier of affordable housing. Thus, it is our view that this stock must be viewed as a valuable and irreplaceable social resource and its regulation must be given deep, thoughtful, serious consideration in order to preserve both its affordability and its integrity, and we know from the experience of tenants that both are in grave jeopardy.

I would like to bring out as well some misleading statistics. You hear the fact cited that 80% of Ontario's tenants receive only the guideline increase and that the average increase is only 11%. This does not sound so bad, but let's take a second look. This means that each year about 20% of Ontario units go to rent review. At this rate, in five years all the units in Ontario can receive these hyperinflationary rent increases.

What is more, once landlords get the hang of rent review, they tend to go back every year. Three applications in three years for the same building is not unusual, and those tenants, even if they received only the average of 11% three times in a row, would be looking at a 39% increase in the cost of their housing in three years. We know from Statistics Canada information that the trend over the past 15 years is that tenant income has gradually lost ground to escalating rents.

If you are prepared to allow the cost of rental housing to inflate at a cost of 11% a year -- and that is just taking this average figure -- you must be prepared to see wage demands adjust themselves accordingly. If wages do not keep up and you are prepared to see tenants spend 40% and 50% of their incomes on housing, you must expect the adverse effects on the economy produced by the shrinking of disposable income.

Aside from disguising the very real plight of those who receive several consecutive increases of this average size, this 11% figure ignores the thousands and thousands of tenants who do every day commonly receive the high-end increases of up to 60%, and in some cases over 100%. For these thousands of tenants, one sudden increase can mean overnight economic eviction.

The financial loss provisions are one of the problems of the legislation that Bill 4 addresses and one of the reasons why this 11% average figure comes out of rent review. What these financial loss provisions do is make owning a residential building a sure-fire, no-risk business. What happens as a result is that the price of the buildings is artificially pushed up. The higher the purchase price, the higher the rents go; and the higher the rents go, the higher the new purchase price.

Combined with the shortage of affordable housing, which forces tenants to pay the higher rents, this is a bottomless pit. It takes from those who can least afford it and puts their money into the pockets of owners. No-risk profits at the expense of scarce affordable housing are unacceptable. In addition, some economists charge that artificially propped up values simply heat up the economy and are counterproductive in the long run.

Now I would like to address the maintenance issue and the fact that the Residential Rent Regulation Act with its provisions for capital expenditures has not done what it was meant to do, which is resolve and improve maintenance.

Here is the typical case, and I mean typical. We hear this again and again. Tenants have paid rent for years and years in buildings where ongoing neglect is the rule, then they get a notice of rent increase telling them that the landlord plans to raise the rent for an amount which is far beyond any increase in their salaries that they might reasonably expect.

The notice of rent increase is usually to cover a schedule of repairs which -- and this is an important factor -- does nothing or very little to improve their buildings from the tenants' perspective. So there are three factors in this case scenario that are important: the ongoing neglect; the unpredictable, hyperinflationary rent increase; and a cosmetic, inappropriate schedule of repairs.

To understand this last issue, we need to talk about what good maintenance really is. Tenants define good maintenance as planned, intelligent, ongoing, preventive and cost-efficient care to all areas and systems of a building, and technical auditors would agree with us on this. The RRRA does not encourage this kind of maintenance.

First, before we even get into that, I would like to talk about this idea that there are good landlords and bad landlords, and if we just fix up the system a little bit, we will get rid of those bad landlords who have taken advantage of the system. The law itself shapes behaviour. Business people simply do what the law allows to maximize profits and should not be expected and certainly not counted on to behave otherwise. It is more productive to look at the legislation and the kind of behaviour that it is shaping as opposed to saying, "This bad landlord is taking advantage of the legislation because the legislation is an invitation."


Let's go on to why good maintenance behaviour is not encouraged by the RRRA. It allows landlords to pass through a cost if it amounts to either 1% of the rental revenues or represents more than a quarter of replacements. For example, if you replace over a quarter of the refrigerators, you can pass it through as a capital expenditure.

Let's take a maintenance activity like painting. Instead of doing the painting bit by bit as required, with a minimum of inconvenience to the tenants, one massive painting project will be undertaken, with ongoing neglect preceding that. At rent review this is called bunching. Some areas will get painted whether they need it or not. Public areas will take precedence over inside suites because it is more difficult to paint inside suites and rent review does not encourage the ongoing expenditure that painting inside suites requires, because you paint inside suites when they are vacant which is one by one, not a quarter at a time.

A replacement activity such as appliance replacement will take place like this: 26% or even all of the tenants will get a new refrigerator whether they need it or not. Bunching is extremely frustrating and unfair maintenance behaviour from the tenants' point of view, but it is absolutely sensible from the landlords' point of view, given this law. If painting and appliance replacement are performed on an ongoing basis, they cannot be used as justifications for a rent increase, so the result is what I call a slip-over of items from maintenance activities to capital expenditures. Of course, it means that tenants are getting less and less for their rent money as they pay it month by month. Are the landlords being bad? No, they are just being shrewd. The legislation encourages them to do this, but from the tenants' point of view, it is just a plain ripoff.

This is a very dangerous precedent which the legislation has set and which it is going to be hard to backtrack on. It has conditioned landlords to believe that any money they spend on their buildings should be paid for by bonus rent increases. Thus, one landlord said to me that her tenants would accept a rent increase because they wanted new appliances. It no longer occurs to this landlord that the tenants pay for functioning appliances in their monthly rent.

Another important point is that cost efficiency is gone. There is no incentive to perform work or replace as required or to find the best price, as any and all sums spent on the building will be passed on regardless. I think what is important here too is that in a way the good landlord is in a sense penalized. The good landlord who is carrying out long-term preventive maintenance, phasing in replacements bit by bit, is penalized. He looks next door and sees the guy who has let his building run down terribly get a massive rent increase and fix the whole place up when that landlord has been milking the building. So it actually penalizes good landlords and I think turns them into bad landlords in a way.

Another type of inappropriate expenditure has come to be known as "marble lobby syndrome." The lobby reno at 892 Eglinton Avenue East was one of the costs contributing to a 54% increase, while basic systems in the building deteriorated. Now why would a landlord do that? This kind of expenditure does make a lot of sense from the landlord's point of view. It is easy to execute and it gives that spiffy appearance to the building. It is the kind of improvement that adds value to the building because it is an appearance issue.

I am sure we all know the kind of repairs people do just before they sell a house. It is quite a different set of repairs than they do if they are moving in and planning to live in it for 20 years. So you can imagine how indignant tenants are when they are ordered -- and that is what it comes down as; it is called an order -- by the government to pay for the mirror and marble lobby when their pipes and taps have been dripping for years.

At 103 Avenue Road, tenants who had been unable to get their bathroom grouting attended to because it is not a capital expenditure came home to find their balcony door had been replaced unnecessarily. It just makes tenants really mad. You can, I am sure, understand. There are some other examples here from 103-105 Westlodge, where there are actually outstanding work orders on the building but the tenants are receiving over-the-guideline, hyperinflationary rent increases, so I just bring your attention to that.

Now, how should landlords pay for capital expenditures? We think they should pay for them in the same way home owners do. Home owners do not expect to get an increase in income because they need a new roof. Also, home owners perform the maximum amount of preventive maintenance and landlords should be encouraged to do the same. There is a Co-operative Housing Federation of Toronto study that I would bring your attention to that shows that preventive maintenance can cut down capital expenditure costs by 30%.

Another interesting example is factory owners. Factory owners do not wait until all their equipment needs replacement and then jack up the price of their product. They would immediately become uncompetitive. They have to stay competitive. They too have the incentive from the marketplace to do the maximum amount of preventive maintenance and save on an ongoing basis.

There is an important myth I would like to bring your attention to, that rent control will produce slums. Dr Richard Applebaum did a study in Santa Monica and found that roughly the same percentage of tenants report their unit is in better condition than when they moved in than worse condition and the vast majority report no change. And I think the fact that there is a lot of information from the United States on the effects of rent control is something we should bring our attention to. We do not have to wander in the dark on these kinds of issues.

As for the New York situation, in New York tax assessment taxes buildings at a higher rate than the land and this has always been a problem where you have that system. The owners of buildings are actually encouraged to let the buildings run down because they will get a lower tax assessment, so it is a disincentive to maintain.

The Acting Chair: Just so you know, there are about two minutes left in your presentation.

Ms Hall: Okay, thank you. Connected to the myth of slums is the myth that landlords cannot afford to do maintenance. But what did they do when marketplace factors determined rental charges? The fact is that landlords are selling water in the desert and that is why they want to drive the prices up -- they are in a position to. They have the consumer over a barrel and they want to capitalize on it. You need also to remember that the equity that has been built up over the years through tenants paying their rent belongs to the landlord.

The process of rent review is really something that I have to say on behalf of tenants is really terrible. It is a full-time job in the midst of a rent review case: fetching photocopies, liaising with the lawyer and the rent review office, vetting bills, verifying repairs, checking prices. I went through this and it is a full-time job, and if no one does the work, the increase will be larger, so there is a big scare factor there. The case needs to be followed for a period of years because of the backlog. If the increase actually jeopardizes affordability, you can find yourself, as a tenants association president, doing relocation assistance. I was involved in that, helping somebody find alternative housing. So it is like you have suddenly got a court case, in a sense, on your doorstep when you are a tenant and you have got one of these increases on your doorstep.

The process is expensive and this really galls tenants. The greatest thing that galls tenants, I have written here, is the fact that landlords can pass through a portion of their consultant and legal costs, whereas the tenants are on their own, and that is just so grossly unfair. Tenants just get furious when they talk about that.

Retroactivity: We applaud the government's retroactivity in Bill 4 because we feel it is justified. Every rent review law has been retroactive. The flood of applications received in September and October would have resulted in further erosion of affordability, extending the ill effects of the system not just to those current tenants but to all the tenants to come in that building, and as it is, tenants will be receiving increases under the system until August.

As for the future, I say, more or less, just let's get on with it. Let's pass Bill 4 and let's get on with passing some sane and reasonable legislation to protect this affordable housing and to protect tenants.

The Acting Chair: Thank you very much.

Mr Mammoliti: The presenter mentioned that she can get her hands on something in regard to preventive maintenance and how it could save 30% of capital expenditures. I am wondering whether or not --

The Acting Chair: I think you can ask that when we get to you, if I can put you on the list so that we do not eat up into our question time.


Mr Tilson: I appreciate all of your comments and I am sure we will all be reviewing your presentation again when we get into the more permanent legislation. I would like to direct my question specifically to Bill 4, which is what this hearing is about. It has been estimated by the minister that the temporary legislation could go for a period of two years. Dealing specifically with Bill 4, do you feel that Bill 4 will help or not help the tenant as far as his or her quality of life is concerned?

Ms Hall: I feel that what is urgently, very urgently, needed is a breathing space and that Bill 4 gives us that, because what we have, as I have been saying, just is not working and the tenants just want to relax for two years and know that they are going to be paying the guideline and not going to have a nightmare land on their doorstep.

Mr Tilson: I guess the difficulty we have with that is that there is no provision for encouraging landlords to make capital expenditures. We have landlords coming to this committee saying they have no funds, and if we are talking a period of two years, do you think that two years will cause almost irreparable harm in maintaining the housing stock if it is not done?

Ms McCabe: The obligation to maintain does not come from the Residential Rent Regulation Act; the obligation to maintain the building comes from the Landlord and Tenant Act. It is an obligation the landlord enters into in renting out the apartment. Tenants do not want the big capital expenditure items. They want their places kept safe. They do not want the marble lobbies; in most cases they do not want the windows; they do want their underground garages fixed when they have got to such a state that they are deteriorating and damaging their cars, but they are not by any means after the big items. They are after regular maintenance, which is already an obligation, and I believe tenants are going to have to be very strict in enforcing their rights over the next two years.

Mr Tilson: I am encouraged to hear you saying that, because one of the items that I expect our party will be recommending is an amendment to this legislation, a form of democracy clause; in other words, if the tenants agree with the landlord that perhaps the roof should be fixed or the garage should be fixed, that it be allowed. Do you concur with that? Do you have any problem with the democracy clause?

Ms McCabe: We have no problem with things being fixed. The problem we have is when the tenant is paying for a basic facility, paying for that facility in his rent and yet fixing becomes an extra charge. Okay? That is a very different issue and we have a lot of problem with that.

Mr Tilson: I guess the problem that I am looking at is when you have a capital expenditure such as a roof and landlords are simply saying, "There's no money to put a new roof on"; not patch it, but put a new roof on. In my riding alone, for example, this past Friday I attended and the landlord said, "Here are my books," and indeed showed them the books. There was no money to put a new roof on, which would cost $85,000 for two small buildings. What do we do there?

Ms McCabe: You have to realize that when we, as tenants, pay to the landlord the guideline increase every year, 1% of that increase is being paid for the landlord to do capital expenditures. We have, as tenants, been paying that year after year after year, and if the landlord does not have the money, then I would like to know where it has gone.

Mr Tilson: Okay, I appreciate that statement. I am looking for this moratorium period of two years and your recommendation as to how we can encourage the landlord to make those capital expenditures if he is saying he does not have the funds. That is all I am asking you.

Ms McCabe: I am saying we have to enforce the rights under the Landlord and Tenant Act.

Mr Tilson: So you are saying, "Enforce the work orders." The difficulty we have is we are having tenants saying, "Even if work orders are instituted, we do not have the moneys to do them."

Ms McCabe: Tenants are saying that, or landlords?

Mr Tilson: Landlords are saying it.

Ms McCabe: The landlords. Then they have to start looking at some financing.

Mr Tilson: The difficulty is they say they cannot get financing, because there is no --

Ms McCabe: I can tell you one landlord who came before you and said, "I can't get financing." That is 860 Pharmacy Avenue. I have for you a copy of a response that the tenants have made to that. The landlord cannot get financing because he has a $500,000 loan out on the building that is not related to any of the work that was done in the building. It is almost always possible to get a mortgage on a home if you have not mortgaged it up to the hilt. It should be possible -- and I would very, very much question if it is not possible -- for a landlord to get a loan out on a piece of property.

Ms Hall: I also would like to address that and say, you know, are we in the business as tenants of digging deeper and deeper into our pockets to bail out every landlord, no matter how responsible or irresponsible he or she has been? It is not up to the tenant to make sure everybody stays afloat if he has done irresponsible things.

Mr Abel: Thank you both for a very comprehensive presentation. Right off the bat in your presentation you had recognized the fact that Bill 4 allows breathing space for much-needed change and that certainly concurs with a lot of the tenants I have spoken to in my riding. Also in your presentation you talked about 10.7% to 53% increases. Do you have an average increase that the people you represent have experienced?

Ms Hall: We have not done a running average of our tenants.

Ms McCabe: We have never done averages, but I would say the average that I see as a tenant organizer going out to buildings where tenants are facing rent review applications would be in the 20%-increase range.

Mr Abel: Twenty per cent, when we have a cost-of-living increase of about 5%.

Ms Hall: Yes. I just wanted to add, that is what I mean by the gradual erosion. They might be able to afford the first 20%, but not afford the next 11% that is compounded on top of that. It is gradual erosion.

Mr Abel: Okay. Also in your report you talked about repairs. In your opinion, do you feel these repairs were made for legitimate reasons?

Ms Hall: Do you mean the repairs that landlords are making?

Mr Abel: That is right.

Ms Hall: I have addressed what I see as a typical case scenario, which is that very often the schedule of repairs is quite inappropriate to the needs of the building and that is one of the things that really frustrates tenants.

Mr Abel: How many tenants do either of you know of who have been economically evicted?

Ms Hall: You are looking at one.

Ms McCabe: I recently talked with 365 Eglinton Avenue East, where the landlord has gone to rent review every year. His first application was December 1986. In that building, the youngest tenants in the building, when the landlord went to rent review, were the ones who were in their 40s. Of 46 units, 25 have had to leave the building, saying, "We can no longer afford the rent." Every one of those was retired and over 65. That is over half the building.

The Acting Chair: Mr Abel, I have two more members of your caucus who wish to ask questions.

Mr Abel: With that information in mind, I guess you agree that Bill 4 is taking us in the right direction for much-needed improvement.

Ms McCabe: Yes. I keep hearing this from tenants over and over and over again, "We don't know how to plan for this year, let alone next year." Because of the retroactive provisions, they do not know what their rents were three years ago, let alone this year. This gives them two years that they can do what is called reasonable financial planning.

Mr Abel: Thank you very much.

Mr Owens: I am glad to see you here this morning and I am really glad that you have touched on many of the issues. I have only been involved with the committee on my second day, but as the MPP in Scarborough Centre, certainly with 40% tenants in my riding, these issues are not new to me.

The myth that you alluded to, that landlords are claiming there is no increase and therefore they cannot afford to carry out repairs, I am glad you touched on that as well.

The presentation that we heard just prior to yours from the concrete restoration association talked about garage repair. I am not a technical person and I somehow cannot make that technical leap between the leak in the basement to, all of a sudden, the landlord charging $2 million for a repair, and I know this has occurred in my riding. I am wondering if you folks had any kind of horror stories around that issue with respect to underground garages and garage repairs.

Ms McCabe: You have already heard from the tenants at 103-105 Westlodge and that is perhaps the most horrendous example, where the garage has actually physically collapsed. It is not underground, it is above ground, but if you go by that building, and I urge you to do that, you will see that the garage has physically collapsed. The tenants have been paying rent increases that have been awarded. There are two buildings. The standards board only saw fit to issue an order against one of the buildings, although the garage is a common area. There has just been a mess. Of course, you saw the papers yesterday to see the absolute latest thing, which is, because of this collapsed garage, they have been awarded a reduction in property taxes.

Mr Owens: That is right.


Ms McCabe: You know, that is perhaps the absolute worst scenario. Realize that the garage syndrome did not occur in 1986. The garage syndrome we started to realize well back into the early 1980s. I remember friends of mine living in condominiums starting to talk about having to have this done in their condominiums. If preventive maintenance had started back in the 1980s, this problem -- as you heard them say, you could have repaired leaks -- would not be as atrocious as it is now. Again, why do the tenants have to pay for a poor engineering decision made by the owner or the builder of the building?

The Acting Chair: Ms Harrington, you have about a minute and a half.

Ms Harrington: Okay. I appreciate a lot of the explanation you gave about the feelings of tenants, that their homes and their dignity are at stake and also how you explained how the RRRA system actually encouraged abuse. I had not heard that explained before, that otherwise good landlords could be encouraged by this to change their behaviour into an irresponsible way of doing things.

The question I have for you is this: Following from the last presentation by the Concrete Restoration Association of Ontario about the problem of repairs and the urgent safety question that we are looking at, how much of the cost of these repairs should fall towards the landlord or how much should fall directly to the tenant? What do you think?

Ms Hall: We feel, as the government or as the party which is now in power stated in its Agenda for People, there should be one guideline increase based on inflation, and the tenants who are in a building that has a major problem, either due to a built-in structural deficiency or due to ongoing neglect, are not necessarily richer than the tenants who have been in a building where there is not a major structural deficiency, if you get my meaning. They are not necessarily able to afford to pay a rent increase that is over the guideline just because they happen to live in a building that is in bad condition. So we do not feel it should fall on the backs of the tenants.

Their rent increases have been keeping up with inflation, along with their wages hopefully, so that, you know, they are not going to have any unexpected reduction in their disposable income. So we do not feel it should come out of the tenants' pocket.

Ms Harrington: But the work has to be done.

Ms Hall: Absolutely, the work has to be done.

Ms Poole: Thank you for your presentation today. You have certainly stimulated, I think, a lot of questions and you have an expertise in this area, so we are very happy to be able to tap you.

First of all, Penny, I believe you said you did not have a statistical analysis but your impression would be that the average rent increase that you are seeing at the federation would be in the area of 20%.

Ms McCabe: That is basically when I am being called out to a building and the tenants have decided to do something about the landlord's application to rent review. We are usually talking in the 20% area. There has been one building that was extremely angry and had a 75% turnout to a meeting, which is extraordinary, over a 7% rent increase. But on the average, people only get that animated when it is over 20%.

Ms Poole: Basically what you are saying is, when people would contact you and are that animated, they really are putting a wholesale effort in, that usually it would be the higher rent increases that you would be seeing anyway.

Ms McCabe: Yes. For instance, the reason Joyce contacted us initially was her landlord went for a 195% rent increase. I would say we get a lot of the extreme cases and some average cases, which is why I would say 20% is pretty average of our membership and representation.

Ms Poole: I was just surprised at that figure, because province-wide it was 5.8% and for those actually going to rent review it was 11%. So that figure seemed very high, but that is because you are talking about the ones who are usually in extreme circumstances.

Ms McCabe: Also, if you look at the provincial figure, we are talking about a lot of very small units involved in the provincial figure, and those people do not tend to contact us. One flat in a house would be in the provincial figure.

Ms Poole: As you know, my riding is primarily tenants. It has some 60%, which I think in raw numbers would come out to about 40,000 tenants. I work with them on a daily basis and in my riding there are about a half dozen buildings in particular that I am concerned with. But many of the others, if there is a rent increase, it is a one-time thing and usually for capital expenditures and we have not had an enormous difficulty with it. The problem is more in the light of those who are going for a very hefty rent increase. You have mentioned 365 Eglinton; the two Balliol buildings that were the subject of the injunction were in my riding; 66 Broadway, where year after year they seem to have a heavy rent increase. Those are ones that give me grave concern.

But one problem I have with Bill 4 is that it treats all landlords the same. It says that no landlord is entitled to get any money reimbursed for necessary repairs, and necessary repairs is something I feel very strongly about. This morning I was at a press conference that was held by the Bretton Place Tenants' Association, which basically said they do not agree with the government's position that necessary repairs should not be allowed through.

My fear is that if there is no provision through a rent review system for necessary repairs, they simply will not get done. We can say till the cows come home: "Well, we'll enforce it. We'll enforce the Residential Rental Standards Board. We'll enforce the work orders." But I think you would probably agree with me that the experience I have had in the past is that they are not working. Bill 4 does not do anything to rectify that. It does not do anything to rectify the substandard conditions, the ongoing neglect, the cosmetic repairs. It simply addresses the amount of the rent without looking at anything else. Would you like to comment on that?

Ms McCabe: Neither did the RRRA.

Ms Hall: I would like to comment on that. I would like to remind you of one thing I said in my brief: What did landlords do when there was a 5% vacancy rate and they could not just jack up rents and keep their tenants? Their tenants would move. This claim that we cannot afford to do anything besides just the very basic I believe is based on the current marketplace economics, that they are in a position to get more money from people because they have people over a barrel. There is no choice of moving. I just do not think we should be totally credulous on this issue.

Ms Poole: I think there is a real difference between minor repairs and major repairs. With a minor repair, I agree with you, that should be covered under the rent, but if you have a fairly massive expenditure such as underground parking or even one such as roofs or redoing the plumbing, I would bet you very good money at this given moment in time that if there is no provision for it, in many buildings that work will simply not get done, and it is the tenants who will end up suffering.

I know where you are coming from when you say that the rent increases, and particularly these extraordinary rent increases, cannot be tolerated. I agree with you. But I am saying, should we not have, even as interim legislation, some provision for repairs that are necessary, with a cap on, with perhaps provisions dealing with ongoing deliberate neglect as far as the landlord's ability to get that capped increase is concerned? Can we not deal with it in somewhat more rational a way than to simply say all landlords are bad landlords, that all landlords must be punished and no necessary repairs need be done in the next two years?

Ms Hall: We do not feel they are being punished by not being allowed to go for bonus rent increases. It is the tenants that are being punished. Under the Landlord and Tenant Act -- I just remind you of what Penny said -- it is an obligation of the landlord to keep the building up to par, and also of the fact that the RRRA has not necessarily encouraged the kind of correct expenditure. You give the landlord the money and you just hope, "Gee, I hope he fixes the garage and does not give us a mirror and marble lobby." So that is why the whole thing needs to be rethought.

Ms Poole: Could I have just one final comment?

The Acting Chair: We are out of time, I am afraid. We want to keep moving. Thank you for your presentation this morning



The Acting Chair: Our final presenter of the morning is from CHAO, the Co-operative Housing Association of Ontario, if we could ask them to please come forward. There has been a change in the deputation. We have Bruce Woodrow, a delegate, and also Cameron Hopkins, I believe a director. Welcome. Also for committee members, there was some additional information that apparently was provided and is now on its way to us, so that will be coming to us very shortly, the main brief.

We have set aside 40 minutes for your presentation, so you can begin now and, for the purposes of Hansard, please introduce yourselves. We will go to about 10 minutes to the hour and then we will have 20 minutes for questions.

Mr Hopkins: My name is Cameron Hopkins and I am a director of the Co-operative Housing Association of Ontario. With me today is Bruce Woodrow, who is a delegate to the Co-operative Housing Association of Ontario from the Woodsworth co-op in Toronto.

The Co-operative Housing Association of Ontario, which we refer to as CHAO, represents the co-op housing movement at the provincial level. We were formed in 1987 to ensure effective communication among the housing coops in Ontario and to allow us to speak to the provincial government with a unified voice. We work closely with other organizations such as the Ontario Non-Profit Housing Association and the Affordable Housing Action Group to develop solutions to Ontario's housing problems.

We are organized as a co-operative, democratically controlled by the co-op housing movement made up of resource groups, federations of housing co-operatives and staff associations. We presently represent something like 400 housing co-operatives in the province representing more than 25,000 households.

Our interest in the legislation at hand is our fundamental belief that housing is a social right and our goal is to ensure adequate and affordable housing, especially for that portion of the population of the province that is increasingly excluded from home ownership. In particular our movement strives to not only provide affordable housing but to create mixed-income, self-managed communities.

However, we cannot look at the problems of providing affordable housing in Ontario independent of the broader housing market and the environment in which all forms of housing operate, so legislation such as that pertaining to rent review having an impact on that environment would be of concern to us.

Our organization strongly supports the amendments proposed in the bill and this directly derives from our belief that housing is a social right, from our desire to see that nobody should ever suffer lack of security of tenure, lack of security of housing because of what amounts to economic eviction.

This view of housing as a social right is recognized by the United Nations. It is recognized by the International Covenant on Economic, Social and Cultural Rights, which Canada is a signatory to, and we feel there is a social responsibility on government to try to discharge the obligations and moral imperatives that are set out in this covenant.

I think we have a tremendous concern with the fact that affordability is becoming an increasing problem for persons who are excluded from home ownership. The 1986 census reveals that Ontario tenant households have incomes which average only 67% of home owners' income and indeed the gap between tenant and owner incomes has continued to grow over a period of time. According to the census as well, something like 32% of all renters spent more than 30% of their incomes on rent. Indeed I am sure you will have heard from other presenters that clients of food banks report that the average client spends as much as 70% of income on rent, which we find to be a staggering figure. It has turned out as well that there have been changes in the housing market over a period of time, which I refer to in the brief, which make it more difficult for tenants to find affordable housing.

The supply of housing in Canada as a whole has been very much influenced by government policy in the period since the Second World War. Through tax expenditures and direct subsidies, it can be said that virtually all housing in the country has in one way or another been subsidized. Beyond providing economic stimulation, this so-called supply assistance has been historically used to help as many people as possible become home owners and to help the private sector construct private rental housing. These initiatives bridged the gap between the real costs of producing housing and what consumers could afford, or what the market would support. In this way the market was allowed to function for a larger portion of the population.

I think there is a lot of evidence to suggest that this approach to housing was not very cost-effective and in fact did not provide affordable housing to people who needed it. Indeed in the last 25 years some 200,000 units of private rental housing have been built directly through public subsidies and tax expenditure programs, and typically created housing for middle-income households and offered tax benefits that tended to flow to upper-income earners.

Additionally some 85,000 units of public housing were created in Ontario, much of it during the 1960s and 1970s, but this model has increasingly fallen out of favour because of the widespread dissatisfaction with the communities created by targeting exclusively to the poor.

Over the last 20 years co-operatives and other forms of non-profit housing have emerged as successors to the earlier forms and now non-profit housing, including co-operative housing, offers the only new source of real rental accommodation. Over 100,000 Ontario households currently live in non-profit forms of housing and most of these developments offer a mix of rent-geared-to-income housing to households unable to afford market rent, as well as the market-rent component.

Of course, in these forms of housing there is no need for the costs to rise other than in accordance with the real costs of maintaining the project. In other words, they are sheltered from the inflation of the market and not only provide over the long term lower-cost housing, but they provide a downward pressure on the cost of housing in the market.

There are a number of studies that have been done comparing the effectiveness of different housing forms and we refer specifically to a study which our organization commissioned of two projects, one a co-operative built under the old 56.1 program of the federal government, and another project built with the assistance of the Canada rental supply program. This study revealed that in 1990 the total assistance costs for each unit in the private project were more than double those in the co-op. In addition it found that 93% of the households that moved into the co-op in 1985 had incomes below $50,000 compared with only 45% in the private project with incomes below this level. Indeed 22% of the households in the private rental project had incomes in excess of $100,000.

We believe this is the kind of evidence that shows that the tax expenditures and other subsidies in the private rental market have not been a very cost-effective way of providing shelter to low- and moderate-income Canadians. I will ask my colleague to continue the presentation.


Mr Woodrow: One of the things that we address in our brief is the shelter allowance alternative, which is frequently bandied about by the development industry and landlords as the solution to the affordability problem, that the problem is not controlling rents, but merely helping those people who need help in paying the rents. We think that is wrong. If you remember, rent review was a response to tight vacancy rates and increasing rents, not the cause of tight vacancy rates and rentals. When it was brought in it was to address that problem.

Landlords were not building enough rental supply units before 1975 when the forerunner of the current act was brought in. They were not building enough between 1975 and 1986 when new buildings were exempt from the rent review provisions and it is unlikely that even with a massive shelter allowance component that they would be building enough.

Their interest is in making as much money as possible from their investment. It is not in their interest to build enough housing to increase the vacancy rate substantially. It is only in their interest to build enough housing to deal with sort of the absolute worst demand, because if they create a significant vacancy, then their incentive to make money from their investment goes down. So even if we had a shelter allowance program, it is hard to imagine how that would really solve the problem, and at what cost.

The cost of such an approach would be enormous. Based on rent and tenant income data from the 1986 census, the annual cost of implementing a universal shelter allowance system at that time without any increase in rents would have been $1.2 billion to $1.3 billion. The replacement cost of new units, however, is approximately three times higher than average current rents.

To make investment viable, existing rents would have to rise substantially. As rents increased, the subsidy cost would rise, as would the number of eligible households. Furthermore, in our view most housing analysts agree that a minimum 3% vacancy rate is required to maintain a functioning market. Therefore, we conservatively estimate the current cost of a universal shelter allowance system to be between $3 billion and $4 billion annually.

In order to continue to attract investment and ensure a functional market, taxpayers would be faced with an ever-growing financial black hole, and in our view there are much better ways to spend money if you are going to spend money on solving the affordability problem. And that has to do with increasing the supply of non-profit co-ops.

However, in terms of the existing renters, there are a number of issues that need to be looked at. Four of them are covered specifically in our brief and one of them in the appendix that we circulated today. These are the four elements of what we think is a proper program for protecting tenants in the marketplace.

One is rent regulation itself. Two is ensuring that the legal requirements relating to maintenance are continued so that landlords have a positive obligation to properly maintain their buildings. Three, control the demolition and conversion of existing rental stock. Four, create new housing through non-profit supply programs and, finally, ensure that tenants have a right of first refusal.

That right of first refusal, which we address in our brief, is sort of a companion to our belief that the government gets a lot more benefit by helping create a new nonprofit housing unit than any other approach that is suggested to deal with the affordability question. If that is true, then one of the things that would be very useful is helping existing tenants do a favour to their landlord. To the extent that a landlord legitimately claims that he or she wants out of the rental market, then we think it is in the government's interest to make it very easy for the tenants to help that landlord out by taking over the building.

I believe it was Mike Breaugh, when he was the NDP Housing critic, who introduced a private member's bill, 146, in June 1988. Its purpose was to propose an amendment to the Landlord and Tenant Act to give a right of first refusal to tenants. That is a very simple thing. If a landlord wants to sell the building, treat it as shelter and not as a commodity and say that at least give the tenants a chance to look at a strategy for coming up with the necessary funding to buy the building themselves.

If you do that and if the tenants are able through a government program or otherwise to come up with a scheme by which they can buy the building, then the government will have achieved some tremendous objectives. It will have introduced stability for those tenants and the tenants who come after them in that particular project. It will have built-in rent control.

I think people who live in co-ops are the experts on rent control. We found that if the people who set the rents are the same people who pay them, the control comes along automatically. It works very nicely and you do not need a government ministry or department to administer it, and the rents stay as low as they can possibly stay while maintaining a reasonable quality of housing. So anything that helps increase the number of units of rental housing in this province that are controlled by the people living in them is going to achieve the objectives we think any government should be seeking in dealing with control of the marketplace.

In terms of the rent regulation itself, we think there are lots of people who are being evicted economically, in that the rent of the housing unit they are in -- in some cases, for years or decades -- simply gets so great that they can no longer afford to live there. If there were more non-profit housing, they could simply move to that. Anybody who has ever looked at the waiting list for housing co-ops, private non-profit or municipal non-profit, knows there is not enough housing.

Our basic point is that people need to be protected from this economic eviction. We think the issue is not landlords losing money. I am sure there are landlords who can prove they are losing money, but in our view most of the issue is not whether landlords are losing money but whether they are making as much money as they want. If I were a landlord I would want to make as much money as I could and I would attempt to make as much money as the prevailing system would permit. If I were dealing in gold or electrical components or something, perhaps I would feel I should be able to do that unfettered. But if I am dealing with people's shelter, it seems to me a reasonable role for government to look at exactly what is a reasonable amount of money for a landlord to make and how a tenant can be protected.

There have been a number of concerns expressed with respect to this particular bill and its effect on the major repair question. I do not think we yet have the complete answer to the major repair question, but I want to suggest an approach I think the government can look at over the two years or so that it takes to look at the permanent system. Virtually every condominium and co-operative -- I am not sure about the other non-profits -- have mandated by some level of government or government agency the requirement for a replacement reserve. What this simply means is that a portion of the money that is paid each and every month goes into a fund which is then available to do the repairs that are necessary when a large item comes up. Condominiums are mandated through the Condominium Act, co-operatives through the various funding arrangements they have, whether it is through the Ministry of Housing or Canada Mortgage and Housing Corporation.

It is interesting that there is a growth industry in what is called replacement reserve analysts, because lots of condominiums and lots of co-operatives have said: "We think replacement reserves are a good idea. We think they're such a good idea that we're concerned that the amounts mandated for us are not enough." In fact, there are lots of examples, both in the condominium area and in co-ops, where they voluntarily increase the amount of reserve to make sure that at any given time they can cover the major repairs that will undoubtedly arise without severely increasing their housing charges at that particular time.

The administration of that is quite different, though, when the people who are going to benefit from the expenditure are not the people who are collecting and holding the money, and any requirement for a replacement reserve approach would have to have a few key components. One is that it would have to be viewed as tied to the building, it would have to stay with the building when the building is sold; second, there would have to be some kind of constraints on how it is invested and when it is spent and how it is controlled, because I am sure the average tenant would not trust the average landlord to be in complete control of the money they are paying into reserve to make sure that maintenance is done. But it works in condominiums quite well, it works in co-operatives extremely well, and I think that should be something the government should look at.

In the meantime tenants need protection, and we think the bill, which is designed to put a cap on some of those expenditures for a couple of years to give the government a chance to work out a permanent form of rent review or rent control or rent regulation, is a good one and we hope the bill will pass with those provisions intact.

Mr Owens: In terms of your right of first refusal amendments to the legislation, in the past two days I have heard landlords talking about how they are not going to be able to afford to stay in business. Have you noticed any exponential increase in the number of applications to co-op conversion as a result of Bill 4?

Mr Woodrow: I would not say I have noticed an increase in co-op applications; I would not say there was an exponential increase. It is my understanding that the resource groups that tend to develop co-ops are getting more inquiries from landlords or developers, who are beginning to think that a non-profit use of a project, whether it is already built or in planning, would make more sense. Of course, a part of us thinks, "That's great," while recognizing that that is a perception; to what extent the market's perception of what is going on is a correct reflection of what is really going on I do not know. But certainly there has been some increased interest, both from developers with new projects and landlords with existing ones, for the possibility of converting or creating a non-profit project.


Mr Owens: To perhaps help some of the landlords who may be sitting in the audience today, could you explain what the process is for going through a conversion and who actually foots the bill and how much of the money the landlord will see?

Mr Woodrow: The process for creating a co-operative is pretty much the same regardless of whether it is a new construction or a conversion. The process is frequently quite long, and I can assure you that CHAO is dealing with the Minister of Housing in a variety of ways to look at ways of speeding up the process.

Basically, virtually every co-op needs supply assistance. The cost of building of a new project exceeds the amount the market would bear for the cost of that, so there needs to be some kind of supply assistance, and then there needs to be specific subsidies, as every co-operative has a portion of its membership on rent geared to income. There is a whole procedure by which you apply to either the Ministry of Housing these days, or CMHC in the days when we had a government that was properly funding co-op development at the federal level, and there is an approval process there. That is in addition to all the ordinary approvals you would go through for creating a new project.

For a conversion, for a landlord who is wondering about selling the building, it is not very much different than selling to any other willing purchaser, with the exception of the fact that at this point in time it would often be difficult for the co-operative to sign an unconditional offer, or the tenants' group or whatever, and to close quickly. At this point the government does not make available to the co-operative movement the kind of capital resources that are available to some developers and some landlords to close a deal very quickly, because they would have to make the offer conditional on getting the necessary approvals and funding commitments from whatever funding agency they are using. But in terms of what the landlord has to do, it is not unlike selling to anybody. The first contact would often be to one of the non-profit resource groups, of which there are about five in the Metro area and one in most other cities in Ontario. You would make contact with the resource group and do some preliminary work on what are possible numbers and then try to agree on a price. But, as I say, it would definitely be a conditional offer.

Mr Mammoliti: Given that one of your main concerns is affordability -- of course it is one of my concerns as well, and the residents in my riding made it clear during the campaign that it is one of theirs as well -- does not Bill 4 help to protect the affordability of current rental stock, in your opinion?

Mr Hopkins: Yes. We agree that indeed it does protect the affordability of current rental stock. We are specifically concerned about the increases in rents that put people into a condition of spending more than 30% of their income on housing. We recognize that this is intended to be an interim measure and that there are a lot of problems that will have to be worked out in the long run, but we consider that it is an appropriate interim measure and we support it.

The Acting Chair: We have about a minute and a half for Ms Harrington.

Ms Harrington: I liked your opening statement with regard to the fact that supply assistance since the Second World War has mainly gone to home ownership and this has not been cost-effective for getting affordable housing, and that obviously we have to change, because tax shelters and tax benefits to some people to produce housing for ownership is not working.

I really understood what you were saying, that the co-ops are the experts in rent control. I think we have to look to you to see how to do it. Besides that, co-ops are very special in the feeling of ownership and feeling of pride of the people who live there, and that is very important too. We have to look at that with regard to our management of Ontario Housing Corp stock.

How have you been able to manage a good maintenance level in your buildings without increasing beyond, say, whatever the per cent is? I wanted to ask what per cent your costs or your rental amounts go up every year.

Mr Woodrow: It varies quite a bit. I am also the delegate for my co-op to the Co-operative Housing Federation of Toronto, which has monthly meetings. Every meeting starts with a little round robin, and people often say, "We just had our budget meeting and we approved an increase of" whatever. Those increases sometimes are at the rate of inflation, sometimes they are below the rate of inflation and sometimes they are above the rate of inflation. All that means is that when people see that the actual costs are above the rate of inflation, they are usually willing to pay, because they want a reasonable standard of housing.

The thing you have to remember is that for many cooperatives, the years when they have an increase above inflation are often balanced by years when they are below rate of inflation. With some of the newer programs we are still waiting to see, as the mortgage instrument itself is somewhat inflationary, exactly how fast -- in my co-op, which is 11 years old, we have dropped below the market very quickly, because we are independent of the market. We raise our housing charges, as we call them, or rents, each year to cover our actual increases in cost, and we have now dropped dramatically. I would say we are probably 40% or 45% below the market that existed when we first opened in 1979.

I do not have the statistics to say exactly what the co-op increases are. I can tell you that sometimes they exceed inflation, but that is because the people who have to pay them get to make the decision and they will make the right decision whether maintenance of the building is important or so on. Most of the co-ops are maintained extremely well, because it is the people who have to live in them who are getting to set the standard of maintenance.

Ms Harrington: And your reserve fund is something you have to --

The Acting Chair: We are out of time I am afraid. The reserve was mentioned earlier.

Ms Poole: Thank you for your presentation today. You have given us a unique perspective we have not heard before, so we do appreciate that.

I wanted to ask you about something you mentioned in your brief. When you were talking about the landlords' losses, you said maybe what we should be looking at -- I am paraphrasing -- is not what landlords lose but what they make. One of the things we have been grappling with on this committee is the retroactivity. We have had a number of small landlords in particular who have come before us and actually burst into tears, saying this was their retirement property, they did a lot of the work themselves, and because of Bill 4's retroactivity they would not get the money back they had put in; for instance, if they had done capital expenditures, they would not be able to get that money back. Some of them have not been able to refinance because the lending institutions have refused, and a number of them are basically on the verge of bankruptcy.

Yesterday when we were in Hamilton we had a presentation from the Housing Help Centre, which is a centre that basically assists tenants but also deals with landlords in that capacity. Their viewpoint on the retroactivity is: "Retroactive legislation is rarely justified and always dangerous. Retroactivity requires overwhelming evidence as to its necessity to justify such action." Do you feel that the retroactivity of Bill 4, which basically says that landlords who expended money may not be able to recoup it, is fair?

Mr Woodrow: When we are looking at interim legislation, when we are talking about a moratorium, in that context it is fair. Between landlords who are making claims about what it costs to operate their buildings and tenants who are facing economic eviction, I am going to side with the tenants, in the short term at least, every time. I do a certain amount of rent review work and I see a lot of claims for what landlords' costs are and what they need to be making.

To put it mildly -- I do not know whether it is the landlords themselves or the fact that there is this growing body of rent review consultants -- they look for every loophole and they are often less than candid in the way they attempt to present their financial affairs. So I do not have an easy way of judging the extent to which landlords' claims for bankruptcy or losses are really there. Obviously, those landlords who go bankrupt I guess were right, and those who are threatening bankruptcy, it may be interesting to monitor if over time it happens.

But we are talking about a short-term moratorium to give a different government with a different view of what we think consumer protection legislation should be a chance to decide what the scheme will be. The landlords will be making their pitch on what is fair and what is reasonable for the long term, and I do not think for most landlords having this two-year moratorium is going Lo be a serious problem. I may be wrong but I think the two-year aspect -- I do not have any qualms at all in saying it is the tenants who need the help in the short term, and let's look at the overall system in the long term.


Ms Poole: We have certainly been hearing evidence on this committee to the contrary. I guess as the bottom line, bankrupt is bankrupt, short term or not, and many of these people will not be able to recoup. So we do face this as a problem.

One of the things the government has said is that the retroactivity is justified even if it is unfair, because there had been a massive influx of applications to rent review in 1990 and it had to be halted in its tracks. I asked the ministry for statistics on this to see whether it was backed up, because I had been told that it was a cyclical thing every fall. Much of the work was actually done in the spring and summer months as far as capital expenditures are concerned, and every fall there was an influx of applications.

The statistics I have received from rent review show that the total for 1988 for units that went to rent review was 207,882; in 1989, 179,385; in 1990, 182,641. This certainly does not seem to indicate that there has been a major influx of applications or units affected. I have also looked at the cyclical thing, looking at the fall months to see whether there has been a dramatic increase, and in fact, I think it is somewhat less than 4,000 more. This is units I am talking about now that went to rent review in the fall months of 1990, as opposed to 1989.

It seems to me the statistics do not back up their claim that there has been a huge flood of applications since this government came in power. Do you feel that, if there is no basis to show that there has been a flood of applications, in fact the retroactivity is justified?

Mr Woodrow: It seems to me the retroactivity is dealing with two different issues. One of them is the relatively long time it is taking for existing applications to get through the system. If the concern is that the increases are too high, it does not really matter whether it is because of a flood just before the period they came in or because the ones that were made two and three years ago are now finally coming on stream.

It simply does not work to say to a tenant: "Oh, by the way, your rent two years ago has now gone up by 100%. Pay it or you are out." As somebody who has worked with tenants facing eviction, there are landlords who say: "Pay it or you are out. You now owe it, you are now in arrears. I'll give you to the end of the month to come up with it."

I am not part of the government. I am not trying to defend their figures or their claims. I am saying that the retroactivity is necessary now because the system is not working for tenants, and the rent regulation system should be consumer protection for tenants.

Mr Tilson: I would like to ask a question with respect to your philosophy as far as housing is concerned. Do you feel that the private sector has any role whatsoever in the apartment business?

Mr Hopkins: Absolutely, and we do not want to suggest that all landlords are bad landlords or any such thing as this. We recognize that society has a mix of housing forms. Co-operative housing is a relatively new housing form as compared with other forms. We believe it is a very effective one for a number of social purposes. Our organization certainly thinks it is a very good thing for people to have a choice of housing form.

In the best of all possible worlds, if the supply problem were adequately addressed -- and, of course, we advocate that the supply problem should principally be addressed through non-profit and co-operative housing programs -- but if the supply problem is adequately addressed, I suppose there would be much less need for rent control.

Mr Tilson: With respect to your comments on shelter allowances, I am going to ask you to help me with co-ops, because I will be the first to admit I am not an authority on co-ops. My understanding of co-ops is that a certain percentage are geared towards income, that the maximum rent is equivalent to 25% of the tenant's salary and that the province subsidizes the rest of the cost in those particular cases. In other words, it is a form of subsidy.

There has been a criticism of co-ops that many people living in co-ops assisted by the public are in fact taking away a lot of scarce affordable housing that is needed by needy people. Do you have a reaction to that? That has been a criticism that has gone around, and I have been waiting to ask someone like you, who are obviously authorities, whether those allegations correct or whether they are not correct.

Mr Woodrow: If you are willing to skip lunch, we could give you a thorough answer to that question.

Mr Hopkins: Let me start and perhaps Bruce could say something else. I am quite happy to address that. To begin with, there are two kinds of assistance that are provided to non-profit housing and co-op housing. One kind of assistance is, of course, rent-geared-to-income, which subsidizes low-income earners so that they are only paying 25% of their income on their housing.

But this has a cap on it, which in Toronto would be roughly $30,000 or $35,000, or something like that for a family. Anybody earning above that is going to pay market rent. When people move into the development, quite clearly the rent is set at market. It may be the low end of market but it is market. Over a period of time, it becomes a better deal for the people who are living there, partly because land speculation and other factors have driven the market up faster than inflation outside of co-ops and partly because the members' own efforts keep down the cost of maintenance.

Mr Tilson: The reason I asked that specific question on that point, does that not go counter to your position that you are against the subsidy type of assistance?

Mr Hopkins: Let me come back to the other kind of subsidy. The other kind of subsidy I think was really more relevant. The other kind of subsidy is a supply-side subsidy that allows the co-op or the non-profit to be rented at market. If market rents are $800 a month and the economic rent, in other words the cost of the mortgage, is going to be $1,000 a month, then no landlord is going to build. It is understandable that no developer will build. The governments have concluded that they need to subsidize that gap -- the bridge subsidy, in other words -- in various ways. So subsidy has been provided to allow the units to be rented at what the market will bear.

Those supply subsidies have not only been to nonprofit developments, because over a very long period of time there has been an enormous subsidy to private home ownership in the form of the tax-free capital gain that would be made on a unit, which in Canada is something like $4.5 billion a year of tax expenditure. By the way, we are not necessarily criticizing that, but in fact it is a tax expenditure and it encourages people to go and build houses. There are also the kind of tax expenditures that have gone to developers with investment incentives and so forth, which also are bridge subsidies.

Mr Tilson: I appreciate that, but again does that not go against your second speaker's comment as being against subsidies?

The Acting Chair: I would just caution that you have about a minute and a half and Mr Wilson has a question as well.

Mr Woodrow: I will be as quick as I can. I think there are two issues. One is that, to me, there is quite a difference between providing a shelter allowance to someone who lives in a project which has built-in rent control, because the members keep the costs at whatever it takes, and a shelter allowance provided to somebody who has to go out on the market where the market is unregulated. Landlords have said, "Get rid of rent controls and use shelter allowances for the people who need help." That is going to raise the costs of shelter allowances dramatically because the rents themselves go up. That was the point I think we were trying to make on shelter allowances.

In terms of co-ops themselves, the co-ops have always tried to be mixed-income communities. Our society had that debate in the mid-1960s and we said, "We are not sure that OHC is doing the right thing by creating these large complexes of people who are all with the same kind of income problems." Co-ops said, "We think we can do it a better way," and for two decades we have been building mixed-income communities. You cannot have a mixed-income community if you say only low-income people can live in it.

There is a whole long list of reasons why the mixed-income communities are good, but that is the model we have and we think that is the model that should continue.

Mr J. Wilson: This morning we heard from the concrete restoration association, which pointed out some serious safety concerns with some repair work that is needed in parking garages, for example.

Landlords have appeared before this committee asking that they be allowed to pass through necessary capital costs. The co-operative system seems to me to have a built-in mechanism geared to do exactly that. Have you any examples, though, even though the co-operative system is relatively new, of major capital costs that you have had to incur in some of your buildings and what the rent increases might have been then?

Mr Woodrow: There certainly have been projects with major capital costs. Most of the ones I am aware of relate to construction deficiencies by the builder that built it as opposed to sales, but there have been a few examples of acquisitions which at some point have found things.

Certainly at federation meetings we will hear people saying, "We had to swallow a 9.9% increase," or an 8.7% or whatever and everyone goes ooh and ah because we are all trying in any given year to keep roughly in the neighbourhood of inflation. I am sure there are probably examples above that. I cannot think of any offhand with specific figures.

Mr Hopkins: There are many examples where the replacement reserve system has done precisely what it was supposed to do in terms of protecting for the long run integrity of the project. For example, after 20 years, you might expect that you need a new roof or some other kinds of major repair. So although people argue somewhat about the level of replacement reserves, the replacement reserve system has basically been a good system and the people who have administered have done it in a very responsible way.

Mr J. Wilson: I guess where we have problems with that --

The Acting Chair: I am sorry. We are out of time.Thank you for coming. We appreciate your presentation today.

To the members of the committee, our research staff have put together the first draft of the breakdown of all the presentations that have been before us. Elaine, do you have anything you wanted to say?

Ms Campbell: I would just like to point out to this committee that this is merely a first draft. We will have the final copy ready next week. As much as possible, we tried to group the comments by sections of the bill, but you will notice by looking at the table of contents that there were several more comments that were more general in nature and that has led to the introduction of several overall headings.

The committee recessed at 1213.


The committee resumed at 1402.


The Acting Chair (Mr Mahoney): I will call the meeting to order. Our first presenter this afternoon is the Ontario Home Builders' Association. Welcome. We have set aside 40 minutes for your presentation and we would like that to be a 20-minute presentation and 20 minutes of questions from members of the committee, if you can accommodate that. I would invite you, for the purposes of Hansard, to introduce yourselves and begin whenever you are ready.

Mr Libfeld: My name is Al Libfeld and I am the president of the Ontario Home Builders' Association. With me today is Brian Kozman, director of policy and research, as well as Steven Blaney, vice-president of Kleinfeldt Consulting Engineers.

The Ontario Home Builders' Association represents 4,000 companies involved in this province's residential construction industry. Our members comprise all aspects of the home building sector and we are located in 33 centres across Ontario. These companies together produce approximately 80% of our new housing.

Not only do our members build new homes, OHBA's members have historically tried to address the needs of those who choose to rent. Whether through construction or property management, our members have tried to provide the best quality rental accommodation possible. Since the introduction of rent controls, however, the incentive for builders to expand the stock of rental housing has all but evaporated.

The government has stated that builders have not been part of the rental market because land costs, interest rates and other economic factors make it financially more lucrative to build condominiums or commercial properties. While this may seem reasonable, it must also be pointed out that these factors have changed for better and for worse over the past 20 years.

What has not changed during that time, however, is the presence of intrusive rent regulations which keep changing the rules by which the market is supposed to function. This uncertainty has made investment in rental construction more risky and therefore less attractive for private sector housing producers. Even more important, however, is the effect which this policy has had on the entire housing market.

To say that the rental housing market has been characterized by Band-Aid politically opportune policy-making would be understating the problem significantly. In many cases, the rationalization for rent controls as a means of ensuring an adequate supply of affordable rental housing has been based on misinformation and rhetoric.

With the introduction of Bill 4, the extent of the problems in the rental market has been once again exaggerated, resulting in cries for radical reform. OHBA does not question that there have been abuses, but even the Ministry of Housing's own figures indicate that the horror studies are low in number.

The question then becomes how to best deal with the problem cases while not unfairly penalizing the rest of the industry. Adequate protection for tenants must be fundamental to any housing policy. OHBA respectfully submits, however, that it was not increased protection from high rent increases or concerns about rent review legislation complexities that prompted Bill 4's introduction, because if this were the case the draconian nature of the legislation could not have been justified since the problems are not as pervasive as the government would have people believe.

Rather, the true purpose of the bill was outlined by the Premier in a 1989 interview. When asked how to go about getting rental units out of the hands of larger owners and into the hands of co-ops or tenants, he said: "You make it less profitable for people to own it. I would bring in a very rigid, tough system of rent review. Simple. Eliminate the exceptions and loopholes. There will be a huge squawk from the speculative community, and you say to them, if you're unhappy, we'll buy you out."

Ladies and gentlemen, the above statement sets a very dangerous policy direction. This province and the taxpayers cannot afford that type of policy direction. The people who rely on the jobs produced through renovation work to rental buildings cannot afford that type of policy direction. Finally, the tenants who believe that capping rent increases at some artificial level is good for them will find that they are living in deteriorated buildings and cannot afford that type of policy direction.

I would like to explain why OHBA believes that Bill 4 represents a policy that does all the wrong things to all the wrong people. In a normal housing market, an upturn in the business cycle prompts investors to begin new rental projects. Home owners create rental suites. Existing units are vacated as the economy improves and low interest rates allow more renters to become home owners. Lower-priced apartments become available as some renters of older units move up into the new buildings. The net result is an increase in the stock of all types of rental units and increased opportunities for low-income people to have access to lower-priced units. That type of market is not the one that exists today, and it would not exist even if economic conditions were much improved from what they currently are.

The housing market relies on its ability to attract potential buyers from many sectors: immigrants, newly married couples, move-up purchasers etc. It has also relied in the past on renters who desired the opportunity to create equity for themselves through home ownership. As renter incomes increased, the propensity was to seek higher-priced housing, whether rental or ownership. As rents increased in a properly functioning market, there was a complementary element to apartments and single-family homes.

Rent controls remove the incentive to move up by keeping rents artificially low when compared to house prices. The disincentives to move up were reinforced during the recent economic boom by a housing market with few moderate-cost housing options. The only windfall of rent controls fall therefore to higher-income people whose rents take up a disproportionately small portion of their income.

The standing committee has already heard that 43% of tenants pay less than 20% of their income towards their rental housing costs, and more than three quarters of those tenants earning more than $45,000 per year spend less than 20% of their income on rent. As one developer has put it: "We've got plenty of low-income housing. We've just got upper-income people living in it." So on the one hand the rent control regime has benefited well-off tenants. Unfortunately, it has benefited nobody else.

Hardest hit have been those who were intended to be helped by rent controls, lower-income people. Because of their inability to get into lower-priced rental units, these people have been forced to pay more than an acceptable portion of their income for housing or they have been forced to accept substandard housing. In both cases they have been the losers.

As American housing experts Peter Salins and Gerard Mildner point out, "That rent control helps the rich rather than the poor is the greatest perversity of the system.... If the net result of rent regulation is to make the rental market somewhat harder on the less fortunate, and easier for the rich, why have rent control at all?"

Bill 4 will make this situation worse. By simply sticking its head in the sand and refusing to accept the realities of how the market functions, the provincial government will economically condemn lower-income people to less housing and greater financial hardship.

Ontario's overall housing stock is being damaged by this shortsighted policy direction. Rent controls have provided little incentive for investors and builders to construct new rental apartments. Prior to rent controls, it was not unusual for our industry to build 30,000 or 40,000 units per year. Since 1975, the private sector has never come close to matching those numbers. It is now normal to build only 6,000 to 8,000 per year.

The greatest tragedy of this and the legacy of rent controls is that the rental stock that has not been built over the past decade and a half would be the affordable housing of today. Even sadder is that this lost opportunity can never be recouped in today's environment.


Bill 4 means that our industry will further lose the opportunity to build new apartments or attract tenants with the means to buy our homes. This is unfortunate since current market conditions have prompted more lower-priced homes and multiple-family units to be marketed.

At a time when our industry and our employees are experiencing a severe downturn, one more policy which puts up an obstacle to getting people back to work is irresponsible and regressive.

The transitional rules of Bill 4 are perhaps the most regressive aspect of the legislation. By prohibiting applications, orders and phase-ins which have an in-effect date of 1 October 1990, the government will wipe out the investments made by hundreds of landlords who applied for and received rent increases to cover legitimate capital improvements.

You have heard of numerous examples of just how far back in time the retroactivity aspect of the legislation will apply. Many landlords have in good conscience made commitments in anticipation of recouping their investments. Bill 4 unfairly punishes them for their forward planning, especially small landlords whose rental investments take up a larger share of their equity.

Last week in the Financial Post the Minister of Housing indicated, "Bill 4 was introduced to stop the system in its tracks by placing a moratorium on high rent increases." The only thing that has been stopped in its tracks by Bill 4 is this government's purported commitment to fair and honest policy-making.

The high rent increases which the government keeps referring to are few in number. Their own statistics bear that out. Yet we still hear about the prevalence of triple-digit rent increases and economic eviction of people by the thousands. As the Fair Rental Policy Organization pointed out in its submission to the committee, less than 1% of Ontario's rental units receive increases of 30% or more. Only seven hundredths of 1% fall into the 100% and over category for increases.

It would seem appropriate, therefore, for the government to act responsibly by credibly and statistically illustrating the magnitude of the problem it perceives rather than simply parading out individual situations which we all agree should be dealt with in a just manner.

It is not only landlords who have been hurt by the retroactive application of the bill; the renovation industry and the material supply companies which rely upon it have been damaged as well. This is especially important because of the depressed state of our economy. Renovation work is extremely labour intensive and accounts for almost as much activity as does new home construction. Bill 4 ensured yet one more reason for an employer to make cutbacks.

The day after the legislation was announced, landlords who had committed to work or were already under way with repairs saw the writing on the wall regarding their capital investments. Their reaction was not unreasonable and swift. They cancelled renovation projects and threw out of work hundreds of workers.

Our association cannot understand why this government, with its first major policy move on housing, encouraged a decrease in employment in the construction industry. If the province, with its permanent version of a new rent control law, fails to take into account legitimate capital improvements, more job losses will be felt in the future.

The other major group to be hurt by this legislation will be the very people the government believes it is helping, namely, the tenants themselves. Bill 4 will accelerate the eventual decay and deterioration of Ontar-io's rental housing stock. It will do this by making it economically impossible for landlords to pay for the costs of repairing heating systems, balconies, plumbing systems and leaking roofs.

While landlords will suffer, tenants who have to put up with the resultant problems will be hurt as well. This does not bode well for our housing stock. The Ministry of Housing estimates that current stock needs $10 billion in repairs in order to bring it up to existing standards. Unfortunately Bill 4 will make that likelihood of those repairs more uncertain.

It was interesting to note that the Minister of Housing recently made a commitment of $15 million to the repair of rental buildings. This amount could be eaten up by the repair costs of three or four parking garages which have succumbed to salt corrosion. Are you prepared to hand over more cheques as more problems are identified? As indicated earlier, the taxpayers of Ontario cannot afford this type of policy direction.

The precedent which the province has set by stopping all orders as of 1 October 1990 is a harmful one indeed. There is little justification for changing the rules of the game after the game has started. There is absolutely no legitimate reason for doing it based on misleading information and political rhetoric.

I have already made reference to the fact that Bill 4's rent limits on capital expenditures will ultimately damage the quality of our rental stock. They will also undermine the investment which landlords, investors and the financial institutions have in that stock.

In order to give the standing committee a better view of the ramifications of this provision of the act, OHBA has invited a consulting engineer, Steve Blaney, to address the issue more fully. I would like now to turn it over to Steve.

Mr Blaney: Thank you very much for the opportunity to address the standing committee on general government regarding Bill 4. My opinion is based on over 15 years' experience as a consulting engineer and vice-president of an engineering company specializing in the field of building science, science surrounding buildings.

In the course of our work my staff and I have had the opportunity to inspect many types of residential buildings, some of which provide rental accommodation. I am concerned that the 24-month hiatus in the recovery of capital expenditures created by the uncertainties surrounding Bill 4 will prevent landlords from completing major repair programs. This, while protecting some tenants from short-term rental increases, will ultimately result in the need for considerably higher future rents or direct government assistance in order to provide for the replacement of deteriorated building components.

Correct building maintenance requires scheduled repair and replacement of components in order to obtain the maximum service life from items such as parking garages, roofs, mechanical equipment. If, due to the lack of capital funding for this work, required service of these items is deferred for two years or more, the eventual cost to repair or replace these components will be very much higher. This situation should concern the Ontario government, because much of the Ontario rental housing stock has reached an age when major replacement of aged equipment is required. Bill 4, amending the Residential Rent Regulation Act, will not stop the clock and prevent further aging of our housing stock.

The situation surrounding parking garages is one of the better examples of this problem. It is well known that corrosion of steel reinforcement within reinforced concrete parking structures has resulted in a need to complete major repairs to almost all older buildings. If, due to the lack of funds, waterproofing membranes required to protect the slabs from old salts are not repaired when scheduled, chlorides could penetrate existing or even previously repaired concrete within the parking structure. This would irrevocably aggravate the corrosion process that would within a relatively short period of time require structural repairs costing much more than the simple replacement of the waterproofing system.

The inability of some landlords to recover expenses for capital expenditures as a result of Bill 4 may prevent completion of structural repairs to already falling and deteriorated concrete of parking garage slabs or balconies. These delays could eventually require the complete demolition and reconstruction of that portion of the structure. This is because the rate of structural deterioration, once initiated, progresses rapidly to previously unaffected areas unless checked by proper repairs.

The Acting Chair: I must tell you that your 20-minute time period for presentation is up and we do have questions. If you want to wrap up at this time, we could go to questions of committee and perhaps address some of your concerns there.

Mr Blaney: I will wrap up. It is my position that the proposed changes to the rent regulation system, if enacted, will not protect the Ontario rental tenants in the long term if the landlord is not given the ability to recover expenses for major capital expenditures.


Mr Tilson: My question is with respect to Bill 4 specifically and its philosophy. As you know, on 18 February the minister is going to be introducing his paper on the permanent legislation, which will probably make Bill 4 redundant -- which makes us wonder why we are doing all this, because we will have to do it again. I am sure you people will be coming to read your speech again.

I have listened to your comments as to what will not be done by landlords. We have had landlords come and say they do not have money to do this, they do not have money to do that, in some cases not even to keep up maintenance, let alone capital expenditures. This weekend there were two major articles in the Toronto Star, one on each day, with respect to the slums of New York. I do not know whether you read those. Many of us have. My question is: If the philosophy of Bill 4 is maintained in the permanent legislation, can the tenants of this province expect to anticipate the slums of New York in Ontario?

Mr Libfeld: We are heading in that direction. I am not an expert on housing with rent control, but we are heading in that direction. The housing stock we have will deteriorate, because people will be making the decision not to invest, not to hire the renovation contractors, and it is the wrong direction to be going in.

Mr Blaney: I recently interviewed property managers and owners of rental accommodation representing 60,000 suites in Ontario for the purposes of redoing the life expectancy of major capital items in buildings. My observation was that by and large many landlords, even through the early 1980s, continued to do the required repairs. Unfortunately, because of the length of time the rent review system has existed and primarily, as I said earlier, that most of the buildings in this province are at least 20 years old, the exponential curve is at the high end now and this is the time when the major portion of those repairs are going to have to be completed. If there is no money to do them, you will definitely see a deterioration; if you drive around the city, you will. I know of single-housing projects that currently require over $25 million of investment in order to bring them up to standard.

Mr Tilson: I think that is the major issue, that 75% of the buildings in Ontario are 20 years old or more. That is the real issue that concerns me, because Bill 4 does not appear to address the issue of capital expenditures. Tenants' rents are going berserk. They cannot pay for them, in many cases. Landlords are saying they do not have the money to do it, and that is why I asked that question.

Mr J. Wilson: To continue along that line, we have heard time and time again, and will hear before the committee adjourns these meetings, that there is a real frustration out there from tenants that, in their view, landlords have not kept up the buildings all the way along when they have been paying -- a portion of their rent increase each year is supposed to go into a pot to look after capital construction, required projects. The explanation we get from the industry is exactly what you said. It has hit a peak now, 20 years, but I would like to give you an opportunity to expand on that further because there is a real frustration out there with tenants who do not understand why the crunch is suddenly on now, and what were the landlords doing with money prior?

Mr Blaney: I certainly cannot comment, because I am not a landlord, on how landlords use their funds for capital improvements, but certainly in the case of condominiums, they put money aside in a reserve fund pot. I know a few private landlords, including commercial building owners, who developed sinking funds for capital repairs. In fact, in my experience, we have tried to encourage the municipalities to put aside sinking funds for capital repairs. They are very reluctant to do it because you have to put money aside now for some time in the future. However, I think you are reaching a problem that the cash required to make the repairs is extremely large.

Mr J. Wilson: Just to continue playing devil's advocate, you mentioned in your brief that with the removal of rent controls -- I assume that means that if developers were given an assurance they would never come in again -- we would start to see an increase in the number of rental units coming on the market. But there have been other studies to indicate that this is not necessarily true. What do you say about that? Because the committee is grappling with two sides of that issue also.

Mr Libfeld: You are opening up the marketplace, and the marketplace will adjust. When the economics get better -- interest rates are presently going down, land prices are presently down based upon the recession -- there would have been opportunities for people to build rentals, to build condominiums today, if rent controls had been removed. That will continue. There are opportunities up and down the line because costs and interest rates have come down. When we dealt with it six months ago, a year ago, the interest rates were very expensive and land was very expensive, but that is not the case now. It is coming more into line and people could be making decisions, proper business decisions, to build a building presently for rental and maybe down the road that they will sell it as condominiums or whatever the case is. But increasing the supply side of the equation has been completely neglected in Bill 4.

The Acting Chair: Ms Harrington.

Ms Harrington: On your second page you mentioned that the legislation in the past has been characterized by Band-Aid, politically opportune policy-making, and you mention misinformation and rhetoric it has been based on. I would like to assure you that it is not rhetoric this legislation is based on. We now know very solidly that the system that has been in place is not working; it is not working for anyone. It is very important now that we have this breathing space, which is Bill 4, so we can move next Monday to the discussion paper and decide as quickly as possible what we are going to do with new legislation and have it so that it works. We have to have some kind of rent controls which are fair in this province. In effect, that will probably benefit your organization, because if people have affordable rents they can save in order to buy a home.

You also mention the retroactivity. For some people it has not gone back far enough, because when we set 1 October as the deadline for this, 130,000 tenants are still going to be affected by pass-through of rent increases from the previous years. No matter how far back we go, or put it forward in the future, we cannot do justice; we are always going to hurt one side of the equation.

In your presentation you gave your overall view of housing in Ontario. I would like to assure you that in the future of housing in Ontario, we want the non-profit housing, we want the private rental stock -- we want that to work well and efficiently; we want landlords to make a fair profit and to treat their tenants correctly -- we want new home builders. Part of the equation is even Ontario Housing Corp; we want to improve that. So there are many parts to the whole picture.

The Acting Chair: Do you have a question?

Ms Harrington: I would just like to say that I do not agree with the trickle-down theory, where people move up in houses and then you can let new people into the market. In British Columbia, with rent controls taken off there, that did not encourage any new apartment building.

Last, I want to point out that repairs are included in the guideline increase every year. Landlords do have money for repairs.

I would like to turn it over to Ms Ward.


The Acting Chair: If we could ask a question, it would be appreciated. These gentlemen have come here for that purpose.

Ms M. Ward: I do have a question, but first I will explain where the question arises from. You, along with some other groups, I believe -- the Association for Furthering Ontario's Rental Development and so on -- have quoted the Premier's 1989 interview. There is one word there I want to ask about, in the line that says, "There will be a huge squawk from the speculative community." I have wondered, when I hear people quoting the Premier and using this to condemn him, whether they are implying their approval of speculation. Can you tell me what you think speculation adds to our economy in the way of goods and services? I do not feel speculation is a good use of our investment funds. Can you explain to me whether you support speculation?

Mr Libfeld: First, the word "speculative" was the Premier's word.

Ms M. Ward: I understand that, but by using this you are passing a judgement on it.

The Acting Chair: Let him answer. You have asked the question.

Mr Libfeld: I am not passing judgement on the way he is using the word; I am passing judgement on possibly where he is going on it. As far as your question goes, I have used "speculative" as investments. This industry has made the investments in the land and the buildings that are presently housing all the tenants. It is the industry that did it. Without that speculative investment, without that commitment to going out and buying the piece of land, getting the mortgage, borrowing the money from the banks to build those individual houses, none of these units would get done. In that regard, I am all for speculative investment.

Ms M. Ward: Well, that is not my interpretation of speculation. My interpretation of speculation is buying something already existing in the hope of it increasing in value and selling it. I think that would be the general public's understanding of speculation, not investment that builds something. So you have a different interpretation.

Mr Duignan: The brief presented this morning by the Federation of Metro Tenants' Associations tackled one of the myths or arguments often used by landlords, that rent control will create slums. A study done for the Senate rules committee in California found that after a decade of rent control in Santa Monica roughly the same percentage of tenants reported their units in better condition than when they first moved in, 18%, as in a worse condition, 19%, while a vast majority, 64%, reported no change. I wonder if you have some comments on that.

Mr Kozman: First of all, we did not make reference to that in our presentation. I had a chance briefly to take a look at the federation's brief when we came in the room. The problem we have with rent controls is the incentive it creates from an economic standpoint. Al made reference in his remarks to it doing all the wrong things to all the wrong people. From our perspective, in terms of making an environment where it is profitable -- not from a dirty or bad standpoint -- where it is reasonable for a landlord to make a fair rate of return on his investment, that is what we want to see engendered in a rental housing policy.

We have never said, however, that we do not want to make that investment, that we do not want to keep up with the maintenance. We do. The opportunity has to be there in the legislation and engendered in the legislation to allow us to do that. Bill 4 does not permit that; in fact, it goes backwards. Even though you made some good planning decisions about where you see repairs necessary in your buildings, the legislation says you cannot recoup those moneys, you cannot recoup that investment.

A number of people who have come before the committee -- and we have had a chance to take a look at Hansard and see the newspapers and what not -- are saying to you that it is just unfair. That kind of policy is going to hurt them. They cannot make those repairs, they cannot foresee salt corrosion in their parking garages, they cannot foresee that their boiler is going to break down after a 25-year process. There has to be provision in the legislation to recognize those things.

Mr Cleary: I was very interested in some of your comments, and I met with some of your group as late as last Saturday. They are trying to plan their spring and summer activities right now, and are finding it very difficult if Bill 4 comes into place. As you represent some 4,000 companies, do you think the lowering of interest rates would make any difference even if Bill 4 does go ahead?

Mr Libfeld: That will make a difference in the economy. As far as the rental is concerned, it will not make that much of a difference.

Ms Poole: Thank you for your presentation today. In the final paragraphs of your brief, you ask that Bill 4 be significantly amended or preferably withdrawn. We are trying to determine what amendments would be fair and what would make Bill 4 a better piece of legislation.

Other than the retroactivity, which you have gone into extensively in your brief, what amendments do you see could be made to Bill 4 to make it an effective piece of legislation, yet at the same time foster a little better sense of goodwill between landlords and tenants than appears at this moment?

Mr Kozman: The retroactivity is a big aspect of it, but we would also like to see a recognition in the legislation that takes into account that there are buildings out there that are deteriorating. They are at the peak of their life cycle in terms of the components that go into them. It will be the boiler, the appliances, those sorts of things.

We would like to see recognition in the bill that allows landlords to make that investment, to continue making an investment, and to know that once they do make that investment they can recoup those costs in a fair way; not one that penalizes tenants but one that allows the tenants to live in a building that is habitable.

That is just not in that legislation right now, so that is one of the amendments we would like to see.

Ms Poole: I agree with you about the protection of our aging housing stock. Many of our rental housing units right now are not in very good shape. They are 20, 40, 50 years old, and the decay does concern me. I think we can make amendments to the legislation to address that, but there is one thing I would really like your comment on.

I think you have acknowledged in your brief that some landlords have abused the system, if I can use that terminology. A Ministry of Housing official said I should actually use something more like "took excessive advantage of the system," but for simplicity's sake, there has been abuse of the system by some of these landlords. What do you propose that would penalize those landlords and at the same time not punish those landlords who are taking care of their properties, who have a good rapport with their tenants and are not coming out with outrageous rent increases -- those who are dealing with the problem in a forthright way?

Mr Libfeld: Basically, deal with them on an individual situation. The system, because of the few that are abusing the system, should not be changed to this drastic direction.

Mr Kozman: With respect to the Metro federation of tenants, they made a representation this morning which said the legislation tends to influence people's decision-making. Rather than taking a look at penalizing landlords, put in place legislation which encourages them to do the right thing, which encourages them to continue looking at their building as a long-term investment, which most of them do right now, and to continue taking into account the fact that they have tenants who want to live in decent, affordable accommodation.

You can put in place the mechanisms that say we want to ensure that the building stock that is there stays habitable. You can put in place mechanisms which do not necessarily penalize bad landlords but encourage them to undertake the necessary investment to keep those buildings in good repair.

Ms Poole: I might agree with you about providing the incentives for landlords to take good care of their buildings and not charge excessive rent increases at the same time, but I have a problem with not penalizing landlords who do abuse the system. I think we have to tighten the system up so that it does not take place. For instance, if a landlord, in the opinion of the minister, does engage in ongoing deliberate neglect and does not do the day-to-day maintenance and does not take care of the repairs that need doing, do you see that perhaps he should forfeit the right to a statutory increase, any increase at all, even the guideline amount?

Mr Kozman: In those cases I think it is appropriate. When you have situations where a landlord is deliberately taking advantage of the system to the detriment of the tenants, there should be a mechanism in place to deal with that and there should be a stick. But there should also be a mechanism to say the legislation is so complex now that you have people trying to ferret their way to find out the loopholes and those sorts of things. Not all landlords do that, and I think most tenant-landlord relationships are good ones. If there are instances where landlords are taking advantage of tenants, there should be an opportunity for the minister or for the municipality to come down hard on them. Whether in fact that person should lose the opportunity to have an increase, I do not know; I am not a rent control expert. I would rather see a situation put into place whereby he can be forced to make the necessary repairs. I do not know that taking away his opportunity to get increases which can help him recoup those costs will achieve that goal.

The Acting Chair: Thank you for appearing today. We appreciate your brief and taking the time to come before the committee.



The Acting Chair: Our next presenter is Councillor Michael Walker. I should announce that two other rooms have been set aside where this is being televised internally, room 230 and room 180 down the hall, where there is apparently an overflow crowd of, I presume, supporters of Councillor Walker. They are there and welcome to watch us from there.

Mr Walker: They are supporters of Bill 4.

The Acting Chair: Whatever. You have been given the same as everyone else sir, a total of 40 minutes, 20 for your presentation and 20 for questions; I will try, as I have, to stick to that, with your help.

Mr Walker: Mr Chairman, I would like to introduce Sue Henry. She is chair of the North Toronto Tenants' Network, and Sue Farrell and Brian McGee are the co-chairmen of 221 and 265 Balliol Street complex, the notorious one from the courts.

I am here today to tell you that Bill 4 is the first good news for tenants coming from Queen's Park in a long time. The provincial government is finally making an attempt to stop huge rent increases, and it is crucial. Many tenants are getting close to facing economic eviction from their homes. As the Honourable Dave Cooke, the Minister of Housing, said in his statement to the Legislature of 28 November 1990:

"During the past three years, more than 330,000 tenant families have faced increases above the rent review guideline. In some cases, tenants have been required to pay rent increases of more than 100%. For many, this was tantamount to ordering them to leave their homes."

The Residential Rent Regulation Act is simply not working and it must be changed. One of the tenants said it all in her letter. It was addressed to the previous Minister of Housing and I received a copy of it:

"My landlord has applied for a 70% increase through the rent review board. The fact that a landlord can even apply for such a hefty increase is proof of the inadequacy of the current legislation and an insult to every tenant in this city."

That is what rent review under the Residential Rent Regulation Act is: an insult to tenants.

There are two major problems with the Residential Rent Regulation Act. First, unnecessary luxury renovations guarantee big increases, not maintenance work. One tenant said this: "Driveways to apartments are filled with potholes. The plumbing needs replacing as the sinks back up, the toilets often require repairing due to old pipes." However, the work that was done on his building was "a new mirror and pedestal sink in the bathroom, ceramic tiles and a mirror for the kitchen, microwave ovens and dishwashers, sliding mirror cupboard doors in the bedroom" -- I am wondering, he seems to have a fetish on mirrors -- "and prints of famous paintings and a carpet in the hallways."

Tenants of 221 and 265 Balliol Street in Toronto took their landlord to court. The landlord began doing costly renovations that included the installation of dishwashers, all new windows, new kitchen cabinets and counters and bathroom vanities, luxury renovations. The requested increase: 39% in one year.

As their local representative, I took their case to Toronto city council. My colleagues agreed to give these tenants, on behalf of all tenants in the city, the necessary financial support so that they could fight this matter in the courts on an equal footing with the landlord. The landlord finally won that appeal. The escalating costs and delays in getting their case heard prevented the tenants from continuing their battle.

Landlords who buy buildings are allowed to recoup some of their financing costs through increases in rents to a maximum of 5% per year above the legislated rent increase amount. The tenants ask, "Why should we pay thousands of dollars more a year in rent just because we have a new landlord?" Nothing has been done to their apartments. The provision allowing to pass through financing costs serves as an incentive for apartment building owners to flip properties to gain accelerated rent increases. Tenants are subsidizing a new owner's mortgage costs.

The Residential Rent Regulation Act, as it is presently constituted, is creating a situation where capital expenditures are an effective method of raising rents significantly. That boosts the landlord's revenues and adds to the building's resale value, which in turn encourages flipping of the rental properties. In short, the legislation creates a vicious circle of rent increases for tenants and it must be fixed to work better for both tenants and real landlords.

Motions that the city has placed relative to the old Residential Rent Regulation Act: Over the last several years, I have taken a number of initiatives, along with several other councillors, most particularly Councillor Kay Gardner, through Toronto city council to make amendments to the Residential Rent Regulation Act, culminating with a meeting with the old minister last June. They all fell on deaf ears, and I emphasize "all."

Bill 4 offers real help. It limits the number of opportunities for a landlord to get a rent increase above the guideline, which is 5.4% in 1991. Only moderate rent increases above the guideline to help cover some operating cost increases which are clearly beyond the landlord's control will be permitted. Increases to finance luxury renovations or the flipping of apartment buildings would no longer be allowed. Good. Hurray. No rent increases arising from capital expenditures will be permitted. Bill 4 is good legislation and I would like to express my full support for it, on my own behalf but also on behalf of tenants.

Real, reasonable landlords will not be penalized by Bill 4. Bill 4 calls to task landlords with an eye only on the fast buck and who neglect their buildings and their tenants. Many landlords have been neglecting their buildings for years and now they are trying to catch up. They got caught. Little repairs, when neglected over time, become big repairs and very costly.

What is needed to make this moratorium work? Bill 4. I feel that the moratorium will work well if it is supported by a new strengthened provincial legislation that would help the city, and most particularly Toronto, to enforce the housing standards bylaw. The city of Toronto has a good housing standards bylaw to help maintain property standards. The problem is that fines for bylaw violations are not high enough. They are like a slap on the wrist. To have some meaning, these fines have to be much higher.

Some progress has been made recently in dealing with environmental polluters: high fines and even jail sentences. I would like similar tough measures applied for prosecutions under the housing standards bylaw, the building code, the fire code and other city bylaws which deal with matters relating to housing, especially when we deal with repeat offenders.

Also, what we need at the municipal level is to expedite prosecutions. It is not enough that the fines are so low, but it takes, also, years before cases are heard by the courts. Take, for example, charges that were laid by the city's buildings and inspections department under the bylaw for not providing adequate heat in apartment buildings. We have some landlords in north Toronto, most particularly on Eglinton Avenue East, who are repeat offenders. But what incentive is there for such a landlord when he knows that his case will not be heard for years? Will he care to provide adequate heat in the meantime for the tenants? The answer, through experience, is no.

City council asked the old provincial government last April to create a municipal division in the provincial court which would consider any municipal matter with which it was constitutionally possible to deal to expedite prosecutions. Tenants really do need a municipal court.

To make the moratorium work better, we must create a reserve fund for capital expenditures. Moneys received from rents should be deposited in a separate bank account for the purpose of establishing a reserve fund for each apartment building. These moneys are to be used, in my opinion, only for financing capital expenditures associated with that building, such as roof replacement or repairs, new plumbing and risers, garage repairs etc. The reserve fund should be subject to an annual audit by the provincial government. There should be a significant financial penalty for landlords who fail to open such accounts and make the required deposits.

In closing, I would like to say Bill 4 is a good start and today is the first time I have heard they are working on the new legislation, the permanent legislation. I fully support it on behalf of the tenants in my ward and in north Toronto and in the city and feel it is a definite benefit to tenants. In the long run, I am hoping that the New Democratic Party government in Queen's Park will keep its election promise to tenants of rent controls with a single increase each year based upon the rate of inflation. Thank you very much.

Brian McGee and Sue Farrell are going to be speaking on behalf of their association.


The Acting Chair: You have about eight to nine minutes left in your presentation time.

Ms Farrell: Brian and I represent approximately 500 suites and 900 tenants as part of the 221/265 Balliol Street Tenants Association. One of the things we have acquired during the past two years, along with the injunction we sought against certain luxury, unnecessary renovations, is a wealth of experience, first with forming the tenants' association, right through to attending at the Court of Appeal.

In this limited time it is impossible to cover all our points. However, we invite you to read our submission. We support the government's effort in Bill 4, but it does not solve all the problems. It is a short-term measure.

At this time, Brian will cover the highlights and problems and recommendations in our submission.

Mr McGee: A tenants' organization today must be prepared to spend a very great deal of time and effort if it is going to have any success and even if it is going to come to understand the proceedings.

In our efforts we have had to deal with the city solicitors, city councillors and city hall, get our own lawyer, form an association, deal with rent review, the Rent Review Hearings Board, the Minister of Housing, the Ontario Supreme Court, the Court of Appeal, the land-lord's lawyer, the landlord himself and a property management office. We all have regular daytime jobs and we have found it necessary in the last two years to spend literally thousands of hours of our time trying to sort our way through all the legislation, all the structures that have been put in place.

Along the way we found it necessary, as Mr Walker has pointed out, to engage in a very considerable level of financial management and administration. At various times this association, by itself, has been responsible for upwards of $160,000 of legal obligations. This includes a security bond that was posted on our behalf by the city when we did go to the Ontario Supreme Court; city loans of $43,000, which we were and are obliged to pay back, and tenant fees and funding, plus donations from other tenant associations which have come to us of over $68,000. All of this has been necessary to support our efforts, first, to come to an understanding of and, second, to be able to deal with the problems we have faced in the last two or two and a half years. These encompassed, principally, a 39% application by the landlord, followed by a 16% application.

In our efforts we have attempted to identify the problems in our submission and we have identified them in four general categories. First of all, what exists today is a patchwork quilt of legislation and a maze of structures which provide obstacles rather than remedies to those who seek and require access. Second, the system is not timely. It is not responsible, nor does it respond in a timely fashion to those who seek remedies. Third, rent increases cannot be guaranteed as of right. Fourth, the ability of tenants to control or have reasonable input to their rights to quiet enjoyment of their home is severely limited or constrained.

In considering these problems, we have made, again, three very general statements of recommendations. Our submission contains the detail behind these. The first is to consolidate all laws respecting residential landlord and tenant matters; second, to consolidate all agencies and regulatory bodies respecting residential landlord and tenant matters; third, legislation must impose financial and management accountability.

We have added some items we hope that you would be able to consider and we have added other initiatives we feel are necessary. In addition, our presentation provides a tenant commentary and a background for your information on the 221/265 Balliol Street Tenants Association.

In closing, I would like to read the last paragraph of our tenant commentary.

"The freshness of this government has the opportunity to preserve and enhance the rental stock of the province; to protect and nurture it until it can be self-sufficient. The window of opportunity is there but the question remains whether or not it will be managed successfully. While we recognize that there are many `good' landlords, it is equally true that many are not. It is not our objective to restrict the ability of a landlord to earn a reasonable...profit, but to ensure that fiscal and social responsibility are functions of the profit equation."

We would like to thank you very much for having this opportunity to speak with you.

The Acting Chair: Thank you. Does that conclude your presentation?

Mr Walker: Well, Sue Henry is right here and she has made a brief submission. It answers these two points.

The Acting Chair: All right. Please go ahead.

Ms Henry: I am here today representing the North Toronto Tenants' Network, the boundaries of which are Bayview Avenue on the east, Bathurst Street on the west, St Clair Avenue on the south and Lawrence Avenue on the north.

I am also here today, along with Michael and my colleagues here, to support Bill 4 and ask that it be enacted while the present Residential Rent Regulation Act is under review. The act needs a major overhaul in order that it is both fair and equitable to both tenants and landlords and also understandable by both parties. Tenants are getting shafted by a piece of lousy legislation which is both incomprehensible and insidious.

Tenants are powerless under this act and are living in fear wondering whether or not they will be able to keep their homes pending receipt of rent review orders, which in most cases are one and a half to two years behind because the bureaucrats cannot deal with the backlog, in spite of hiring more than 1,500 civil servants to deal with the legislation, and I might add, at the taxpayers' expense.

Do not believe that landlords cannot make a profit with government guidelines of 4.6% or 5.4%. This is simply not true. Many landlords in north Toronto have never filed under the rent review system and have maintained their buildings year after year. They are in no financial difficulty. And if you cannot afford to buy a building, do not buy it just to speculate and then go after the tenants to pay for the financial losses incurred.

I respectfully request that all members of this committee request their colleagues to pass Bill 4 as soon as possible. Thank you.

The Acting Chair: Do you have any final comments, Councillor Walker, or requests?

Mr Walker: No. The language here has been much sanitized over some of the true gut responses that people have towards their experiences with the Residential Rent Regulation Act, but we are all civil individuals.

The Acting Chair: Okay, we will go to questions then. Mrs Poole.

Ms Poole: Thank you for your presentation today. I feel like this is old home week with all my colleagues and friends from north Toronto here. First of all, the 221/265 Balliol situation, which Sue Farrell and Brian McGee certainly spearheaded the effort on, was a situation where the landlord had applied for a 39% increase, the first of a number that he intended to apply for. The work that was done was extremely shoddy, very high-priced, and there were allegations that perhaps he was doing inappropriate things for the funds. By the way, I should mention to you I have immunity on this committee because it is an extension of the Legislature; you do not. So I can say outrageous things, but just be careful yourself that you do not get caught for libel or slander.

The Acting Chair: But you will not say outrageous things.

Ms Poole: No, of course not. The landlord, Mr Pieckenhagen, had created a number of difficulties. Because of this case, it went to the court and the tenants actually received the injunction that was mentioned in their brief. Mr Pieckenhagen recently got his rent review order, which is 29%, and he has appealed that because he feels it is not enough. In my viewpoint, he is one of the landlords who has made amendments to RRRA necessary.

What I do have a problem with in Bill 4, though, is the fact that there is no provision whatsoever for necessary repairs, even repairs which you as tenants would agree are deemed necessary. Instead it just -- blanket right across the board -- says that there will be no rent increases whatsoever allowed above the statutory with regards to capital repairs.

The government members have said: "But it is just temporary, it is just interim. Don't worry about it," but I am concerned because in my office over the last four years there have been, I would say, almost as many calls about maintenance and repairs as there have been about rent increases. Tenants want a decent place to live.

If there was a provision in this act which provided that only necessary repairs could be considered, that there was a cap on it; if there was a further provision saying that, if the landlord had engaged in ongoing deliberate neglect, he could not get the money; if there were safeguards to provide for the quality and value for money of the work that is done, those types of provisions, could you live with that as interim legislation while we determine what we can do? I will ask this of both Sue Farrell and Brian McGee.


Mr Walker: I would like to answer as well because --

Ms Poole: Well, I would like them to answer first, Mr Walker. I do not have much time. I am sorry. That is why.

Mr McGee: Our submission contains recommendations that are not inconsistent with what you have suggested. Certainly caps are very much in favour. We do not feel there is any opportunity for movement away from a requirement that a reserve account be set up. We appreciate it in the short term. We do not feel we are in a position to define exactly what that short term would be, whether it is five, seven or 10 years. While that reserve account is being built up, it may be necessary to review on a case-by-case basis applications for exceptions.

But we have tried to cover off in the detail behind our three major recommendations in here that, yes, in all possibility, especially in the short term, there would be exceptions and there should be a provision, but that should not automatically mean a granting of an exception.

Ms Poole: So you would not have a problem with a provision in the legislation which provided that necessary repairs could be considered for a rent increase as long as it was a moderate amount and it had those other safeguards?

Mr McGee: As we have said in our submission, if I may quote: "Landlords must be required to provide a minimum high standard," and without doing that, they should not be allowed increases of any type at any time.

Further, we have suggested a potential solution may be to have landlords licensed, and if they did not live up to their requirements, that licence ultimately could be revoked. But as far as capital expenditure programs are concerned, we feel it has to be justified up front and prior to the initiation of a program of that nature. If the justification satisfies the people, whether they be the regulatory body or the tenants themselves, then that is fine. Where tenants are not satisfied, they must be given a minimum of a year under the current circumstances to relocate.

Ms Poole: We have heard a number of stories before this committee about landlords who, certainly in my opinion and probably in many members' opinions, have abused the system. They have in effect gone for outrageous rent increases for major repairs which could have been dealt with as minor repairs; they have engaged in ongoing deliberate neglect, and they have jacked up the rents in that way.

To my way of thinking, Bill 4 does not remedy that situation. I would like to see and I will be proposing an amendment to provide that landlords who are not good landlords, who do not keep up with the day-to-day maintenance and provide services for their tenants, will in fact not even receive the statutory guideline and have a streamlined process in which to do this. Would you support this type of amendment?

Mr McGee: I have a bit of difficulty with that. It is our contention that the nature of business we are talking about here is not something that is covered as an investment service. It is not a certificate of deposit; it is not a term deposit. It is a business -- and this is a point that our group has been very adamant about -- wherein the primary obligation is to provide a service to the people, a service that is necessary to the health, welfare and wellbeing of the community it serves. We feel very strongly that where that commitment to this community is not being made, there must be ways found to deal with that individual or group of individuals, to replace them ultimately or to redirect the focus of their activities to a point where it will serve the community.

Ms Poole: That is indeed what I am suggesting we do. Thank you.

Mr Tilson: Mr Walker, I must say I am interested in hearing from north Toronto. I was born there and grew up there. I was educated there and I still have a number of friends in the riding and it is a wonderful area.

Mr Walker: Give me a list.

Mr Tilson: Yes, I will give you a list.

I am interested in your comment, though, because I still know a number of people there and I know there are many, particularly seniors, who are on fixed incomes, single mothers and people like that who cannot afford any increase whatsoever. In other words, a long time ago they could not afford any increases and yet their increases keep coming up.

I am interested in your thought process, and I received your notice -- I do not know how I got it, but someone sent it -- maybe because I went to north Toronto, I do not know. In any event, I was interested in your comment that you do support a single increase matched to the rate of inflation. Obviously there are a great number of people in your riding who cannot even afford that. I would like to know what your comments are to deal with that problem, whether or not you would support the policy that our party is considering, that is, one of subsidies to certain individuals.

Mr Walker: Let me answer the first part first. Those people who are seniors on fixed incomes or single parents or single people of very modest means would get down on their knees and face east and thank God if there was only one increase a year based on the rate of inflation. Now they are victims.

Mr Tilson: Sir, they cannot even afford those increases.

Mr Walker: The second is, you are talking about the subsidy. In this last year we have acquired four buildings which are subsidized buildings, run under CityHome, and they are to address those people with needs. We have six seniors' buildings that are providing --

Mr Tilson: The question I am talking about is the overall policy throughout the entire riding. In other words, there are people throughout the entire riding who cannot afford increases and I am interested specifically in whether you support or do not support subsidies.

Mr Walker: No, I support rent control, I support the simple concept, keeping it simple, not complexitizing an issue unnecessarily. One increase based upon the rate of inflation will maintain the housing stock in the affordable category and, as a follow-up, that is what a rent is for, to maintain a building. When somebody gives $600 a month for a one-bedroom apartment, why should the landlord take the $600 and put it in his pocket and say, "When I have to do some maintenance, I have to maybe paint the halls or something like that, then I have to get additional rent"? That is what the rent is for.

Mr Tilson: That is admirable, but there are people who cannot even afford what you are talking about. That is all I am saying.

Mr Walker: We are trying to address that, and I think the previous provincial government tried and certainly this provincial government will be trying to deal with that under the social housing and the non-profit housing sector.

Mr J. Wilson: Mr Walker, it is always a pleasure to have someone appear before your committee who also is elected and responsible to constituents, as we are. I will take the opportunity to tell you my personal view on where this government is heading. We have to assume that some of the landlords that appeared before this committee are legitimate, real landlords, as you say in your brief. Some of those people have told us they would just as soon get out of the business. They have had too many years of rent control, and there are three different parties that take responsibility for that over the years. So we are guilty in some degree, in their eyes, of this current mess we are in.

I think, though, one of the reasons we have such great difficulty with these hearings, for instance, is that we think that the true hidden agenda of the government is to bring in Ontario's or Canada's most expensive social policy, in the sense that we have talked about and there seems to be agreement among committee members that, yes, housing is a fundamental right and a responsibility, but as an elected official, it is going to be Canada's most expensive and certainly Ontario's most expensive social policy. God knows we have a lot of social programs out there now that we can scarcely afford. We have the federal government in tremendous debt.

My question to you is, what do you think about that? If landlords get out of the business and we have people being put out on the street, the government is going to have to fill the gap. It is either going to have to be subsidies on a massive scale or non-profit, which will work to a certain degree, but we also heard that it will not work across the board and that co-operatives will not work in every area.

Mr Walker: I certainly want to put the speculators out on the street, the people who got into the business using the Residential Rent Regulation Act as the vehicle to make fast, quick bucks on the backs and out of the pocketbooks of a lot of ordinary people, namely, tenants. I want to get them all out on the street, drive them out of town, to be perfectly honest, and I think this legislation is the beginning of that.

Mr J. Wilson: I am worried about their tenants, though.

Mr Walker: But the point is that some of those people will -- the doom and gloom and the brinkmanship relative to stopping all the work, that is all this Wyatt Earp type of stuff, see who blinks first, see who draws first and all the rest of it.

Mr J. Wilson: But it is happening on both sides.

Mr Walker: You mean we are going to have some tenant strikes?

The Acting Chair: I have got about --

Mr Walker: There is a -- I am sorry.


Mr Turnbull: Mr McGee, you spoke about profit and the fact that you felt that one should allow a reasonable profit and that it is a business. You said it is not a term deposit. What sort of general area of return do you think a landlord should get on his investment? Just ballpark. I do not want exact numbers.

Mr McGee: We are involved in a situation here where it is obvious there are two different sides, and the tenant's view is the landlord should get the least amount a tenant can get away with paying, and vice versa.

Mr Turnbull: Would it be reasonable to say that they should get at least as much as a bond, that it should overall yield as much as a bond, if you are putting your money in?

Mr McGee: I have a major problem with putting in guarantees, period. I think today the landlord is virtually guaranteed at worst case a break-even and usually a profit.

Mr Turnbull: At the present moment under this legislation, it has been suggested that the property values have dropped as a result of Bill 4 by 25%, so it is not a question of guarantee. A lot of them are going to be wiped out. Trust companies are going to move against them because they cannot make their payments. But my question to you is, do you feel capital appreciation is the offsetting factor?

Mr McGee: I think in the past one of the major reasons why people have been speculating in the market is the capital appreciation.

Mr Turnbull: Okay, with --

Mr McGee: If I can go back to your first question,and I hate to interrupt, but to determine a profit, I think a number of responsible people are going to have to sit down and figure out what the criteria are before you can say a 10% return on investment, a 5% return on capital, a 15% return on assets. There are a number of different measures that would have to be considered and considered very seriously before a good formula could be established.

Mr Turnbull: But do you agree --

The Acting Chair: Mr Turnbull, I hate to interrupt too, but I am going to. We will go to Mr Duignan.

Mr Duignan: Thank you, Councillor Walker, and your panel for coming here today and presenting an excellent brief, making it very clear and simple. That is the whole purpose of Bill 4. It is a simple bill restoring a level playing field to the tenants of this province which has not existed in this province since the inception of rent controls.

I have a couple of questions, and I am glad to see that my Tory colleagues are now recognizing that housing is a right, not a speculative venture. I want to explore a little bit more with you the whole notion of a reserve fund. What would be your idea of how this reserve fund would work?

Mr Walker: Well, I would like to keep it simple again so the people who are paying for it understand it. Take a number. It may be 5% to 10%, I suspect, of every monthly rent put into a reserve account established for that building, and it stays with the building whoever the landlord is. It has to be invested in government securities, T-bills, or it has to have a return equal to the government of Canada savings bonds or T-bills. There is also an audit. I suggested it should be audited by the provincial government and there should be really punitive measures if there is any hanky-panky going on, pure and simple. You shake out all the guys who are trying to find the loopholes, all the shady ones, all the ones who are in it to try to speculate or find some way to cheat on the system. Get them out.

Mr Duignan: And that particular fund then would stay with that building?

Mr Walker: It stays with the building and it is invested back in the building.

Mr Duignan: So when you go to pay your monthly rent, say it is $600, and this amount of money is --

Mr Walker: Take out $30 or $60.

Mr Duignan: And your rent would clearly state that $550 is towards --

Mr Walker: No, the legislation will be, and there will be fines, and I have suggested, on repeat offenders, consideration, like you do with corporate executives who are polluters of industry, that there is a possibility of a jail sentence. They can go where Harold Ballard went.

The Acting Chair: May he rest in peace.

Interjection: Well, we all hope in peace.

Mr Drainville: I just want to speak in response to the comment that we have heard repeatedly over a number of these sessions about subsidies. Many landlords have come to the committee and they have indicated that the problem is not that there are high rents, but rather that there are low incomes. The focus, rather than being on rents, is on the incomes, and therefore the response that we need to have is the response of providing subsidies for people that have low incomes.

Now ultimately what that becomes is another scam for the landlords; that is, instead of talking about corporate welfare bums, we are talking about landlord welfare bums, giving them an opportunity to get money through the hands of the people who have low incomes and therefore getting them off the hook and giving them the opportunity of keeping the rental price high.

From our point of view, this is totally unacceptable for two reasons. One is that this should not be an issue of social legislation. It is an issue of course of morality, but it is not an issue of social legislation. What we need to ensure is that the legislation we pass here in the Legislature is legislation that will ensure that everyone is equitably cared for. That includes the landlords, that they have an opportunity to make reasonable profits, and that people have an opportunity to live in a home that they can afford to live in. I just wonder what your view of subsidies is, any of the members of the panel.

Mr Walker: My view is that there is a role for subsidy. That is what social housing, non-profit, the co-op sector is. But there are a lot of people out there who have modest incomes, and an apartment unit should not be considered a commodity by a landlord any more, if that is what he or she considered it in the past. It is not a speculative commodity. It is a right to have a home and a reasonable home over your head.

There is also a very important need to have controls to prevent the free market running amok and driving a lot of moderate-income people out on the street as well as maybe poor people. I think that you have social programs to deal with the people who are of very low income, or poor people, to put it in simple terms, and you have other sorts of social programs relative to housing -- co-op for poor and moderate-income people.

The Acting Chair: You still have about a minute and a half left in your time in the NDP caucus if you have another question. Otherwise, Mr Duignan.

Mr Duignan: In your role as councillor in your particular ward, do you see many people coming into your office who face economic eviction from their apartments?

Mr Walker: I have certainly gotten some phone calls and some letters back that this is exactly what they are feeling. And it is that uncertainty that took place at Balliol. It was 30% they got in one year and he is appealing it, and then going for the year before with 16% or 25% in the year after 16%. When is it going to end? If it happened only once, you could adjust to it but it is the uncertainty of never being able to.

The people at 365 Eglinton Avenue East, fourth round, are up to 85% compounded over four years. Those people -- hey, just look at them -- they are gone. One of the reasons why you cannot sustain these battles is that after three or four years your core of support has left on you. It has evaporated. People leave town. Not the landlord, not the speculator; it is the tenants who are forced out and they do not all send you a forwarding address. They are gone. The next time you call them up, they are gone.

They have gone through hardship and the deterioration of the housing stock. They have been paying through the nose and they watched their building, 221 -- I went up to see Sue there when we had to get those people to sign those forms to get this $50,000 bond. They had to sign their lives away to the city to get it, and the building was all in the process of being renovated around them. I went up in an elevator that was full of broken glass where the doors run. And it has gone on for years -- well, months and years. This building is falling down around them and they are paying 39%. It was a nice building before this present landlord, Mr Pieckenhagen, got it.

The Acting Chair: Thank you very much, Councillor Walker, and your colleagues for your presentation today. We appreciate your taking the time to come before the committee.

Mr Walker: Thank you very much. I have about 1600 petitions that I received from tenants.

The Acting Chair: The clerk will take those from you.

Mr Walker: No, I am going to deliver them to the ministry. It is one rent increase a year based upon the rate of inflation. That is from 1600 people.



The Acting Chair: Our next presenters are the South Etobicoke Community Legal Services and Lake Promenade Tenants' Association. If we could ask for the changeover, we would like to carry on with the hearings, ladies and gentlemen. We would ask you, please, just as quietly as possible, to go out into the hall for your meetings and your discussions. Thank you very much. We would like to welcome Kenneth Hale and Dee Ranger. We have set aside 40 minutes for your presentation, 20 minutes for the presentation and 20 minutes for questions, and we would like to stick to that schedule, so begin whenever you are ready.

Mr Hale: We will do our best. My name is Kenneth Hale. I am the lawyer-director of South Etobicoke Community Legal Services, which is a legal aid organization that provides legal services to low-income people in the south Etobicoke area. On behalf of our staff, our board and our client community, I would like to thank you for allowing us to come to this and speak. I understand it is a valuable privilege to be able to come here and it has not been extended to everyone.

I would also like to thank the Minister of Housing for introducing this bill and the government for supporting it. I feel that in introducing this legislation, somebody here has finally listened to the complaints of our organization and the members of our community who are sick of paying these double-digit increases every year. I think that what is being proposed is going to stop what was supposed to be consumer protection legislation from being used as consumer exploitation legislation. Even if it is only a temporary bill, it is going to be a relief from the continuing onslaught of these large increases that are compounded year after year after year.

We hope that this consultation process that is coming up is going to be a meaningful process for tenants and is not just going to be a process whereby tenants are sort of cajoled into accepting the fact that they are going to have to get poorer to support their landlords getting richer, because the tenants in our community are being impoverished by the high cost of housing. They are looking for legislation that is going to make sure they have some money left so that they can have a decent standard of living after the rent has been paid.

The landlords and the moneyed people who have appeared before you have displayed what I think is total insensitivity to the welfare and dignity of Ontario's tenants, who are ultimately their customers, and they have shown a complete lack of social responsibility. They also seem to say, "Well, we care about tenants, but" and the "but" goes on for two hours.

I do not think you need to hear anything more. Just listening to these people talk about their buildings, the way they maintain them and the way they run their businesses, the tenant is the last factor in the equation. I think that the way they talk about rental housing should show you why tenants need protection and what kinds of desperate conditions tenants are living in, because these landlords and investors do not give any thought to what the effects of their actions are.

They want $12 million to pay for capital renovation. They demand $12 million. The $12 million has to come out of the pockets of the tenants who live in that building, and I can tell you there are not a lot of buildings full of tenants that can afford to just fork over $12 million because some landlord says he wants it.

I think that behind all the dubious economic theories and these stage displays of emotion what the landlords are saying is: "We own the property. We should have the right to exploit that property ownership for as much as we can get out of it and we do not care what the cost is to others." I do not think that there is any political party here who really agrees with that philosophy.

In the next part of my brief, I have made a number of suggestions about how the bill could be made clearer, and to tell you the truth, some of these are pretty tedious and boring so I am not going to go through them all with you. I hope that members of the committee will take a look at them, but I think it is important to make this legislation as clear as possible because all the high-priced help that came down here on behalf of the landlords is going to be in the courts and wherever else they think they can do it, pleading for landlords in other forums.

The wording of this legislation is going to have to be clear or the courts are going to take the presumption of property rights and use it against people's rights to shelter. So I am just asking you to make this bill as clear as you can to accomplish what you are trying to do, because I think we have seen a number of cases where landlords have been able to convince the courts to basically rewrite legislation that was supposed to protect tenants. I hope that is not going to happen with this temporary legislation.

Getting on to other parts of the law here, we are not proposing that there be any substantive changes made. We support the legislation and we know it is just temporary, but we think it should be pointed out that landlords still enjoy a lot of advantages, even under the temporary legislation. This legislation is not wildly biased in favour of tenants as the landlords and their supporters in the Legislature and in the media, particularly one large Toronto daily, seem to think.

First, the question of retroactivity: This bill is retroactive in a limited way, but if you look at subsection 100b(2) the implementation of the bill is delayed for thousands and thousands of tenants. Some of them are going to be getting the large increases provided for under the old system as late as August 1991.

What does this show? Any time you bring in legislation there is a certain amount of arbitrariness in choosing a date when it will be implemented and there are winners and losers on both sides. These claims of landlords of injustice against them are basically just a self-serving effort to squeeze more money out of tenants. Let's call it what it really is. I do not know why everybody seems to have this collective amnesia about every rent review bill that has ever been passed, but the Tory bill, the Liberal bills, every bill that has ever gone through this Legislature on rent review had some retroactive provisions or some retroactive effect.

So I would just say to those members who are trying to make such a big deal about retroactivity, save your acting for the stage.

The Acting Chair: This is the stage.

Mr Hale: I thought this was the forum for serious deliberation of serious social issues and that the stage was where we entertained.

The legislation still provides virtually automatic guideline increases. It provides two different ways to get around the guideline. It is not a rent freeze. It is not a moratorium on rent increases. Tenants are going to pay these increases whether they can afford them or not and there is no way that a legal rent can be reduced, so again I do not see what the big deal is.

There are also some provisions that hurt both landlords and tenants. There is a provision called section 85, which allows tenants to apply to have the rent reduced if certain things have been already paid off. That is suspended, so tenants might be continuing to pay more rent than otherwise they would be paying if this so-called moratorium had not been brought in.

The point is that rent review is in a mess and landlords and tenants have to put aside the resolution of some of their disputes to allow a new beginning. I think you have seen the landlord lobby is unwilling to give up one nickel of rent they think they should be getting to allow this new beginning to take place. I hope that would make you realize what kind of difficulties tenants face in dealing with these people on a day-to-day basis and how unlikely it is that some kind of voluntary action on behalf of the landlords is going to resolve the rent problem.

In conclusion, the problems dealt with under Bill 4 are not the only problems that tenants suffered from under the Residential Rent Regulation Act. I think it is a complete scandal that the previous government was unable to implement the rent registry. It is like having an income tax system with no T4 slips and people just kind of voluntarily decide, "Well, I think I will be governed by the Income Tax Act," and other people decide, "Well, I don't think I will be." I hope the government is moving very quickly to correct that serious deficiency, because without rent registry you do not have rent regulation.

Second, the Residential Rental Standards Board: I think we can see how effective the rental standards board has been by the fact that the first thing landlords declared was they were going to stop doing maintenance because they did not like the government's policy. They must really be scared by the rental standards board to be able to stand up in public and say, "We're going to quit fulfilling our obligations." They know there is no penalty for them not doing it, and so that is why they felt they could threaten it with impunity.

Then there are the problems of recovering illegal rent, which we will not get into in any detail here. These do not need new legislation. These do not need another five years of study. They need a reorientation of the rent review bureaucracy away from facilitating increases to using the laws to keep rents down. We believe this consultation process that is coming up is important and we look forward to participating in it, but there is lots that could be done within the present laws that would help tenants a lot and we hope that while the government on the one hand is out there consulting, it will implement the law that has been on the books for a number of years in a way that is going to help tenants.


So these attitudes that I have towards rent review, and that our clinic has come from the experience of representing tenants -- we represent them in whole building rent reviews, in trying to get overpayments back and in dealing with standards board orders.

One of the groups we have been working with since 1987 continuously is the Lake Promenade Tenants' Association. The way the rent review system has responded to their concerns and the way their landlord and the landlord consultants have abused the system has been very discouraging for our office and for the tenants affected. We hope that by listening to their story you will start to understand why it is essential that Bill 4 gets passed without any further delay. I would like to introduce Dee Ranger who is the vice-chairperson, I believe, of the Lake Promenade Tenants' Association for her comments on the history of their building and the legislation.

The Acting Chair: We have got about eight minutes left, Ms Ranger, if you would like to proceed.

Ms Ranger: I am on the executive committee of the Lake Promenade Tenants' Association, which encompasses the five buildings, 21 and 31 Park Boulevard and 220, 230 and 240 Lake Promenade on the Lakeshore. We were able to obtain some information from long-time tenants in these buildings, that between 1976 and 1986 there were no irregular rent increases. All increases were in line with the regulations, except that in 1982 the landlords requested a 10% increase which the tenants complained to the review board about. The review board agreed with the tenants and so it was held in line.

However, in 1987 to 1988 the landlord asked for 14% but got 9%. For 1988 until 1991 the landlords are requesting 14% for each year and the tenants are waiting to hear from the review board decisions on this.

It appears that during the period from 1976 to 1986, very few repairs were made and general upkeep of the building was kept to a minimum. In 1986 and 1987, therefore, the buildings were in very poor condition and we believe they were ordered to do major work on at least two of the buildings due to the long-time negligence.

Within the last two years, the carpeting was replaced in all the buildings. This was replacing the original carpet of 25 years' wear and some tenants have had new fridges and/or stoves. However, other tenants are still using appliances which are 25 and some 30 years old, as we believe that second-hand ones were originally placed in there.

There was work done on the pipes in all the buildings, but the workmen left unsightly repairs to the walls in all apartments which have never been fixed. Also in some buildings bathroom sinks are loose and in fact some are hanging right off the walls.

Over the last four years there were quite a lot of tenants who paid only the required 4.6% increase, hoping that the objection to the rental board would be upheld and that they would not have to pay the balance of the increases requested. However, if the rental board upholds the increases to their landlords, then these tenants will be required to pay anywhere from $200 to $2,000 in back rent, which they do not have. Many of the tenants in these buildings are elderly and are on fixed incomes. They have difficulty affording the cost of living increases in the rents, let alone the exceptionally high increases requested over the last four years.

Also some of our tenants are afraid to come with us here today, although some have, but in fact some of them refused to give their names because they are afraid they will be evicted from their homes if they object to the increases. We find that this is unacceptable here in Canada, a free country, that we have people fearing eviction if they speak out for their rights.

In the last few months several tenants have moved out as they know that they will not be able to pay the back payments if they are required to do so. The rents being paid in the buildings are not low. We have checked in the immediate area and rents for equivalent apartments that are equal to, and in some cases of higher quality than the others in the area, bearing in mind that presently there appears to be a glut of apartments available, whereas four years ago there were very few, this being due to the poor economic conditions generally in Toronto and in Canada.

The problems here seem to stem mainly from the change of ownership of the buildings approximately four years ago. We feel that the new owner purchased the apartments as a business investment and did not fully investigate enough to find out that it was not as profitable as he had thought prior to the sale. However, if this were the case, it surely is not ethical to increase the rents out of all proportion to cover their losses. No other business venture would allow this to happen.

In closing, I would like to say that the superintendents have over the last few years been appalling. However, two of the buildings are now exceptionally good and hopefully others will improve in time.

The Acting Chair (Mr Mahoney): Thank you. Does that complete your presentation?

Ms Ranger: Yes.

The Acting Chair: Mr Mammoliti.

Mr Mammoliti: It is our turn first, is it? I just want to relate and compare your particular problem with some problems I have in my riding as well, and that is that substantial increases are driving people out of their homes. In my particular riding, some people are hit with 55% or 60% increases in one shot, and they are being forced out, to shelters and food banks. I would like to know how that would relate to your particular situation and how drastic these increases are in your particular situations.

Ms Ranger: I think it definitely will have people out on the streets or into food banks or whatever because we have a large number of elderly on fixed income, and for various other reasons on unemployment, which is very high now, and there is nowhere else for them to go. They cannot afford the rent there and they will not be able to in many other places.

Mr Mammoliti: So Bill 4 will control it somewhat?

Ms Ranger: Somewhat, perhaps; yes.

Mr Hale: The only difference, I think, with the situation that you were talking about is that the tenants in Lake Promenade are getting it sort of drip by drip by drip every year. It is 8%, 10%, 12% or 15%, rather than getting the 60% all at once. In the end it is the same thing: people who cannot afford their housing. But the philosophy of the old legislation seems to be if you bring it in more slowly people are not going to notice how much they are paying, but at some point they notice that they cannot afford it any more.

Mr Mammoliti: Can you give us an idea, perhaps in a percentage, how many people are being economically evicted in your particular area?

Ms Ranger: I could not give you a number on that because these are all under review, so our tenants have mostly opted to pay the 4.6%, which they really cannot afford but they are struggling to do that, perhaps not eating as much or whatever. However, if these go through with the last four years, then we are talking 50% or so here and I have no idea how many really cannot afford it, but I would guess that probably 50% definitely would not even be able to meet the payments.

Mr Hale: We do not even really know what the rents starting in 1987 are. That still has not been resolved. We have the 1989 application and 1990 application and the phase-in from 1988 and we are talking a large and complicated mess that not everybody is going to be able to keep up with.

Ms Harrington: Thank you very much, especially the tenants, for coming out this afternoon, and it is a very sad statement to have to think that you people may be afraid to come out. I am very glad to see you here.

In your brief you said that there should be "a reorientation of the rent review bureaucracy away from facilitating the inflation of rents." Well, I certainly agree with you. There has to be a whole different attitude, a change, and that is why our government is here, to provide that different approach.

You make a very good point with regard to the problem of the standards board. I think that is something that I have heard in my riding of Niagara Falls and in nearby St Catharines, that people for years have been trying to get enforcement through their municipality and through Toronto as well, and you cannot win with that one. You have to take people to court.

I have two questions. First of all, the level of maintenance: How has that been in the buildings that you have known about?


Mr Hale: Our legal clinic opened at the beginning of 1986 and at that time apartment maintenance was one of the largest issues we had to deal with and it continues to be one of the largest issues we have to deal with, and one of the most difficult to deal with. At least with rent review there is sort of an end to it. At some point an order comes out and they say, "This is what the rent is and there are no more appeals and that's it."

Maintenance seems to be an ongoing, festering problem you never seem to be able to get on top of, because there just is not anybody telling landlords where the limits are. So the threat that they are going to stop doing maintenance -- the joke around the tenants' movement was, "Who would notice if they stopped?" because they are doing so little now. Tenants believe they are paying rent every month and that is what they should be getting in return -- maintenance.

I am not an economist. Whether or not there are further incentives that need to be given to landlords to make them live up to their legal obligations, I do not know. I do not believe it, but I do not know.

Ms Harrington: The other difficult situation we faced this morning was the question of major repairs and, in particular, the repairing of underground garages, concrete work. Who do you think should be paying for this?

Mr Hale: I did not hear their whole presentation, but I understood them to say that these things were defectively built in the first place. Why does not somebody go after the original owner or the original builder? If I buy a car and it is defectively designed, it gets recalled and the manufacturer --

Ms Harrington: Apparently the technology was not there to do it right 20 years ago. The new technology has only been around for about five years or so.

Mr Hale: People having paid their rent every month since the building was opened -- somebody must have known that things were going to deteriorate. Whether they knew exactly what it was or the extent of the deterioration, I do not know. But when they set those original rents there was some plan that in the future, or, "Once our mortgage is paid off, we have the money to make major repairs" -- but now the mortgage gets paid down, the building gets sold, the new owner has a huge mortgage and says, "I don't have the money." But the original guy who built it, if he had continued to own it, would have had the money, because he would not be paying his mortgage any more and he would have lots of money for renovations and repairs.

Whether it is the tax system or whatever, I do not know. I think we should not necessarily just load it on the tenants who happen to be living there at the time, because we have to look at the effect on the tenants as well as the effect on the owners. I think we have been hearing so much about the economics of this and the economics of that. The economics of it does not look at the human side of the tenants who are suffering, and that is what we are asking you to look at.

Ms Poole: Thank you for your presentation this afternoon. I have three major concerns with Bill 4. The first is that it does nothing to penalize bad landlords. It treats landlords the same whether they are good or bad. It does not differentiate. There is nothing in it to discourage and prevent ongoing, deliberate neglect or to penalize it. There is nothing to prevent landlords ignoring work orders. There is nothing to encourage maintenance, or enforce maintenance, for that matter. These are things that could have very easily been put into Bill 4, and I think we as a committee have to ensure they are put in.

The second thing that I feel is deficient is that there is no provision for necessary major repairs and maintenance. You might be perfectly right when you say that if the original building owner were still there and he paid off his mortgage and now was making a substantial profit, he would have lots of money to put into these major items. But unfortunately in many cases over 25 years the original owner is no longer there, and many of them do have large mortgages now and it just is not feasible. And I do not think that even as temporary legislation, even if it is only two years, our buildings can go without these necessary repairs. Not the day-to-day repairs -- that should be provided in the rent, no doubt about it -- but the major repairs.

The third thing is the retroactivity, which I continue to feel is most unfair. Again, you have made the comment that retroactivity is a very common feature in legislation, but there is a very major difference, because either the retroactivity has been addressed through notice, so if the bill takes a year and a half to pass everybody knows it is going to pass and they do not make any future investments or they do not behave in a certain manner, or, second, it grandfathers.

This bill does not have either of those provisions, and I cannot see how you can say it is fair that a landlord who did renovations in the fall and winter of 1989 and the spring of 1990, then puts in his application for a rent increase applicable 1 October, and has put out $400,000, whatever, then you say, after the fact, "No, you're not going to get the money even if you did it by the rules."

I do have a problem. I think it is a fairness issue. I have had problems with how tenants were addressed sometimes in Bill 51, in the Residential Rent Regulation Act, but I do not think that two wrongs make a right. So I would like your comment on those three aspects: the fact that there is no penalty in there for bad landlords, that necessary major repairs are not included, and, third, the retroactivity.

Mr Hale: First, I think it is unfortunate that someone who was elected as a tenant advocate would be here parroting the landlord line; I think this is contributing to people's cynicism about politicians. But on the points you have made --

Ms Poole: I object to that, Mr Chair, because I have not toed the landlords' line, and if you see that --

Mr Hale: Well, it certainly sounds like it to me.

Ms Poole: That is your prerogative.

Mr Hale: First, the penalties are already there. We have laws coming out our ears that provide for penalties for landlords who do not play by the rules. If somebody would enforce those, if money were available for tenants to pursue their legal rights so they would not have to go to Mr Walker and ask him to guarantee their legal bills, if people had that legal representation as a right then maybe some of these things could be dealt with. There are plenty of penalties there. We do not need more penalties; we need more enforcement. Second --

Ms Poole: I agree that enforcement is not there either.

Mr Hale: Second, what you are suggesting in your second and third points is that tenants should be paying more rent to cover landlords' expenditures. What we are saying is that tenants cannot afford to pay any more rent; there is a recession on, the food banks are filled to capacity. If these landlords made these major expenditures, they are the ones who decided to make them and they are the ones who should pay them. If they need more money to cover them, they should go to their banks. If the bank will not lend them the money, they should find the money out of their own resources to pay for it, just like anybody else who makes an investment.

There seems to be an assumption that if you buy into a building you have the right for evermore to make a profit. The reason landlords and investors are permitted in this society to walk away with bags full of money is that we reward their taking the risk, and that is what it is supposed to be all about -- risk-taking. Now the downside of the risk is occurring and they are all here whining. We reward people because they took a chance. Now it has turned against them, they are going to lose, and they want guaranteed protection. They do not want the money from society at large, they want the money from the lower-income portion of the population who are the tenants, and we are here on their behalf to say no, we are not going to give it to you.

Retroactivity -- the Liberals' bill was retroactive, the Tories' bill was retroactive. That is the way rent review legislation works, because if you do not do it that way, while we are sitting here yakking about the bill the landlords are out putting their applications in for approval of rent increases. I cannot believe this committee is so naïve that it thinks landlords are just going to go to sleep while we debate this stuff and that there should not be a cutoff date. As I said, for some people it is not retroactive enough. Some people are going to be paying increases under the old legislation on 31 August of this year, and that is not retroactive.

Ms Poole: Just one last point of clarification, Mr Chair: The previous rent review legislation was retroactive to the date the bill was introduced, and this is not.

Mr Hale: Well, this is a month and a half or some- thing --

Ms Poole: It does not deal with applications, it deals with the rent increase. You know as a lawyer that that takes place far before the rent increase actually occurs.

Mr Hale: But all you are saying is that landlords should get more money out of tenants, and I say landlords should not get more money out of tenants. This retroactive should not get more money out of tenants. This retroactive business is not going to benefit both tenants and landlords. What you are proposing is just going to put more money in landlords' pockets at the expense of tenants. That is why I believe you have stopped being a tenant advocate and have become a landlord advocate.

Ms Poole: You are free to believe that, but it is not true, and I think if you would take the time to look at what I have been saying and take the time to listen, you would understand that what I am trying to do is not only to protect tenants' rights, protect the rental housing stock, but also to bring some measure of fairness to the bill.

Mr Hale: Fairness by giving landlords more money. It has never worked before.

The Acting Chair: Thank you very much for appearing today. We appreciate it.

Mr Hale: Thank you for this chance to do it. I do appreciate it. I hope we can get on with it and get into phase 2 of whatever we are facing. Thanks very much.



The Acting Chair: We may have just solved a minor dilemma. There was some confusion over time. Our next presenter, Mary Jo Donovan of the East York Tenants Association, was under the understanding that she had 40 minutes to present but is only down for 20, along with the other groups. The NDP had agreed to give up some of its time, but we are a few moments ahead, so perhaps we can allow Ms Donovan 15 minutes for her presentation, if that is a fair compromise, and that would still leave five or 10 minutes for questions.

Ms Donovan: If I read really fast, I can barely get it done in 15 minutes.

The Acting Chair: We will listen fast too.

Ms Donovan: You might want to read along with me to get the gist.

Mr Abel: We are prepared to give up our five minutes to allow her a full 20 minutes.

The Acting Chair: Okay, fine. Go ahead. You need not rush too much as the NDP is giving its time to you, generous bunch that they are.

Ms Donovan: My name is Mary Jo Donovan. I am the chair of East York Tenants Association. We greet the members of this committee and thank you for this opportunity to speak on behalf of the tenants of the borough of East York.

The EYTA and its members support Bill 4. Tenants have been at the mercy of landlords since the days of feudalism, and even in this enlightened and democratic society are still suffering intimidation and abuse because of the need for a place to live.

Shelter is a basic essential and its availability must be protected by enforceable laws. Affordable housing must be held as a right, and the desire for exorbitant profit must not be allowed to infringe on that right. Those landlords and speculators who have taken merciless advantage of the defenceless tenant population are directly responsible for the need for Bill 4. If a moratorium were not in place pending new permanent legislation, those who have exploited the system in the past would increase their activities in the interim between the old and the new legislation if something were not in place to prevent it.

Therefore, our support for Bill 4 is understandable. It is a promising start to the process leading to new permanent legislation which will provide protection for tenants with justice and fairness and restore some sanity to the currently out-of-control rental housing market.

Those invited to the EYTA conference on 16 January were representatives of nearly 10,000 tenants. Their declaration of support for this temporary moratorium legislation is attached to this brief.

These hearings would have to go on indefinitely in order to hear all the horror stories which could be told regarding the outrageous conditions with which thousands of tenants must contend. Their complaints and contentions have been ignored by both the landlords and the rent review system. While their incomes and quality of life steadily declined, their rents increased by leaps and bounds. Commentaries from our members, some of which are attached, are here summarized as follows:

43 Thorncliffe Park Drive: We refer you to the letter from Carl Ladek wherein he describes manipulation of the system and the creative accounting practised by landlords when using capital expenditures to justify rent increases above the guideline.

47 Thorncliffe Park Drive: Janet McCleave and others have provided an insightful commentary on the need for rent control and a thorough overhaul of the entire system.

49 Thorncliffe Park Drive: Andy McEwan in his commentary once more draws attention to the fact of unnecessary and costly renovations imposed on tenants who could not afford them, at the same time these tenants lost amenities and services.

27 Thorncliffe Park Drive: Hugh Deane has provided a copy of a Goldlist notice to tenants along with other material. Margin notes indicate the caps which were listed but not done.

35 Thorncliffe Park Drive: Germaine Bourque and Nadine Dare want to know why tenants are forced to pay for parking space which they neither want nor need. Many tenants complain about this unfairness. Another complaint from this building which is repeated in other buildings is the refusal of landlords to permit tenants to move from apartments which are either too small or too large to other apartments in the same building which are now more suitable due to changes in family size.

Those who have commented on these five Goldlist buildings would have some interesting and enlightening things to say in an open debate with the Goldlist representative who appeared before this committee.

44 Thorncliffe Park Drive: This commentary from Omi Ramoutar and Anne Snell goes into considerable detail about the faults and failures of the present system with regard to capital expenditures. Despite the ongoing deplorable conditions described in this commentary, the landlord applied to rent review for a 14% increase.

6 Grandstand Place: The tenants in this building have provided comments regarding unaffordable rent increases and carelessness and incompetence on the job during major repairs, plus a number of other complaints re maintenance and infestations of cockroaches and mice.

4 Grandstand Place: Don Miller decries the 21% increase applied to cover the cost of capital expenditures and contends on behalf of the tenant association that these caps were necessitated by ongoing deliberate neglect. He also believes that a stricter inspection program would force landlords to maintain their buildings properly.

85-95 Thorncliffe Park Drive: Calvin Melrose comments regarding ongoing deliberate neglect, the importance of rent control, and the need for a complete overhaul of the present system.

892 Eglinton Avenue East: Mary Bowen goes into considerable detail about the inequities in the present rent review system, the unfair burden on tenants and the need for change. She also comments on the continuing problems of maintenance and repair. This landlord proceeded with major capital expenditures and unnecessary renovations and applied to rent review for a 92% increase. He was given 54.68% increase, which he has appealed. The decision is pending.

The conditions under which these tenants were obliged to live while this work was being carried out can only be described as horrendous. Their rights were totally ignored, their privacy was invaded, and they were treated with a complete lack of consideration, regardless of age, illness or infirmity. This landlord now has a new application in for a 27% increase. Is it any wonder we need a moratorium?

960 Eglinton Avenue East: Kate Brewitt draws our attention to the unfairness of the present system and its obvious bias in favour of the landlord, especially at the appeal level. She has included copies of letters, the tenant response to the landlord's application and a copy of the order. We urge all committee members to give a careful and thoughtful reading to this material.

165 Barrington Avenue: Sherri McDonald and the tenants' association comment on the unfairness of a 29% rent increase for capital expenditures which were, for the most part, necessitated by ongoing deliberate neglect. These tenants lived in a state of physical and emotional upheaval, turmoil, uncertainty and anxiety for over a year, and when the work was finally finished they had been deprived of former amenities and services and homes that were affordable.

1501 Woodbine Avenue: The situation at this building is long-standing and outrageous. Lack of time does not allow for details here, but I refer you to letters and commentaries from Carroll Barber, Jane Charles, W.H. Giles, Mary Reilly, Stephen and Karen Danks, Mary Davidson, Ray Hoeche, Donna Spotten, Hilda Deakins, Nancy McLaren, Doreen MacKenzie, Thomas and Susan Cheel, George Zhang, L. Owens, M. Maher, J. McLean and Zulie Sachadina. The stories of these tenants are ample proof of the need for speedy and decisive action on the part of the government in the area of rent control.

91 Cosburn Avenue: Elaine Swinamer details a horror story of neglect and substandard conditions. This landlord does not even deserve the guideline increase.

338, 340, 342 Donlands Avenue: Melcourt Tenants Association goes into detail about the unfairness of speculation in rental housing and the problems of ongoing neglect leading to the deterioration of affordable housing.

20 Gamble Avenue: Christine Abbott and Janice McPhail comment on the lack of communication between landlord and tenant, and selective attention to repair and maintenance with strong measures needed to get action. They also decry the cost of capital expenditures forced on tenants.

165 Cosburn Avenue: Letters and comments from Sandy Warren and Bev Cameron once again describe a deplorable situation of ongoing deliberate neglect and lack of maintenance; also, the total unfairness of financial loss pass-through.

72 Gamble Avenue: Jeffrey Astle, chair of the tenant association, supports Bill 4 and rent control and makes a number of suggestions. He also agrees with the comments of the other tenant spokespersons in this brief.

1001 O'Connor Drive: Dinah Nawbatt also comments on the inequities and unfairness and bias in favour of landlords in the whole rent review system. Tenants in this building are dealing with three applications and one appeal involving increases of 10%, 18% and 12%, some of them with phase-ins pending. Without the moratorium, this could have continued to infinity.

510 Dawes Road: Mrs Nelson and Mrs Brown have made some interesting suggestions regarding reform of both rent review and judicial systems. The tenants in this building must contend with a landlord who treats both tenant rights and court orders with equal disdain.

7, 9, 11 Crescent Place: Butch Windsor, president of the tenants association, comments on shoddy workmanship, deliberate neglect and lack of enforcement of standards by both levels of government. The 2,000 tenants in this building have had to deal for years with a faulty ventilation system, lack of hot water, a degraded electrical system, poor lighting, poor maintenance and a management which is indifferent to the needs of tenants and to their rights. The tenant association supports Bill 4 and rent control.


The foregoing is a sampling of comments from building representatives who attended the EYTA conference. The conference was convened on short notice and these comments were of necessity hastily prepared and limited in scope. Those who have submitted them, along with others, are looking forward to presenting a fuller and more far-reaching commentary when the hearings on the permanent rent control legislation commence.

The RRRA was supposed to solve the problems of the previous legislation and include changes which would result in fairness to all, but instead it became an instrument of social injustice. One of the most glaring examples of that injustice is the financial loss provision. Here we see a building change hands three or four times in as many years. The rents double and become unaffordable, while the neglected building continues to deteriorate. With each passing year of iniquitous phase-ins, the tenants pay more and receive less. This is downright wicked. This financial loss provision is tantamount to a licence to steal. This moratorium, in suspending this provision, has in effect revoked that licence to steal, and if there is any justice left in this world, it will remain revoked for all time.

One really despicable aspect of this provision is that landlords were permitted to create the illusion of financial loss, when in reality there was none. The truth is that the purchaser had not acquired sufficient equity to show a profit. This was a deliberate choice. The purchaser of any business anticipates a break-even position or less in the early years of ownership, but landlords seem to think they have a right to immediate profit without making the necessary investment. Landlords are crying foul because they can no longer rob tenants with impunity. Their advocates are suddenly talking about fairness. Those same people who demand so-called fairness for landlords had mighty little concern about fairness for tenants over the past years. This bleating from landlords about the inability to operate a business and maintain their buildings without gouging tenants is utter nonsense and deliberate disinformation.

I have this to say to all landlords, large or small: When you buy a building, you should expect to pay for that building. If your initial investment is too small, then you must accept the fact that you will operate without a profit until such time as you have increased your equity to a point where profit is possible. You have no right to ask tenants to provide the equity for your profit through an inflationary increase in rent. When you buy a new fridge or repair a window or replace a roof, you have enhanced the value of your building. You now own a building in good repair with a new roof. You now own a new fridge. Do not ask the tenants to pay for it with an exorbitant rent increase. You have been receiving a fair rent for many years. The rent includes a fridge and stove. The original rent was set to cover the cost of these. The original appliances have been paid for many times over. The guideline increase continues to cover the cost of fridge and stove, whether original or new. It is absurd to ask tenants to pay for something they will never own or to provide equity in a building for which they will receive no return. Tenants pay a fair rent and a mandatory guideline increase each year. This is the most that any fairminded and reasonable landlord should expect.

The retroactive element in Bill 4 is unavoidable and those who are complaining about it should bear in mind that tenants have been putting up with retroactivity ever since this wretched RRRA became law. Since 1987, nearly 25,000 buildings, or 334,000 units, have gone through the system. That means that nearly a million tenants have had their lives and their pocketbooks trashed by this abomination known as rent review. So tell me if that if fair. Is it fair that children go hungry so the rent can be paid? Is it fair that the beleaguered taxpayers of this province are being asked to subsidize the greed of landlords through the rising shelter cost and the social assistance programs? I could talk for an hour about what is fair and what is not. Suffice it to say that the least unfair thing of all is the government action that will bring a speedy and permanent end to this travesty with which tenants have been beset for so long.

Regarding the proposed moratorium legislation, there are two items which I believe require additional scrutiny and some change or additions.

Part VI-A, section 1OOe, allows for extraordinary operating costs due to increase in municipal taxes. In the borough of East York, when there is non-compliance with a work order, the present bylaw permits the municipality to undertake the work and add the cost to the tax bill. If this type of action should result in an extraordinary operating cost on the grounds of increased taxes, the tenants would once again be forced to pay for the land-lord's negligence. There should be an amendment or a regulation in place to prevent this, which would state unequivocally that extraordinary operating costs resulting from non-compliance with the municipal or other property standards orders will be excluded from consideration under subsection 100e(1) of part VI-A.

Clause 100e(2)(c) deals with extraordinary operating costs arising out of changes in interest rates. In the past few years, there have been many instances of vendor-purchaser deals which established an inflated top price and increased financing with multiple vendor take-back mortgages. Many of these mortgages will be coming up for renewal in the next two years. Something must be put in place to prevent those involved from making a new deal to take unfair advantage of the law once again.

Finally, I would like to encourage all tenants to stand up for their rights. At the same time, I would urge them to play fair, pay the rent on time and have reasonable care and regard for the landlord's property. I would like to encourage all landlords to respect the right of tenants and to desist from the questionable tactics they have employed in the present situation. Be satisfied with making a nice living and stop trying to get rich overnight at the expense of tenants.

We thank all members of this committee for your attention to this presentation and we look forward to appearing before you again when discussion gets under way on the green paper to be released on 18 February, at which time it will be possible to take a more positive approach and contribute what we hope will be some helpful and viable suggestions for the new permanent rent control legislation. Thank you.

The Acting Chair: Thank you. We will go to the Liberal Party first. Ms Poole.

Ms Poole: Thank you very much for your presentation today. It is obvious you went through a great deal of time and effort to co-ordinate all the various tenants associations to make their presentation and I think we are going to have lots of reading material as we travel on the plane tonight. I am particularly pleased that you have actually given us some specific amendments, or proposed amendments, one to deal with the municipal taxation, which is indeed a concern.

The second one, I just wanted to be very clear. When you talk about amending clause 100e(2)(c), which is on your page 9, you state, "Something must be put in place to prevent those involved from making a new deal to take unfair advantage of the law once again." Could you elaborate? Do you have any ideas how this could be done?

Ms Donovan: I am not a tricky lawyer, so I do not know how to put it in place to prevent it, because no matter what I said, somebody would find a loophole in it. I am going to leave that up to the experts. However, I am sure that a number of people in this room are aware of the deals that were made to inflate the top price of apartment buildings and put through a tremendous account of financing costs for the tenants to pay. And if you work it out right, you can make more. You could get richer faster paying too much for a building than paying a fair price for it.

Ms Poole: Well, I am not a tricky lawyer either, so I am afraid I cannot help.

Ms Donovan: It would take me at least a half an hour to try and explain it, so I --

The Acting Chair: Any tricky lawyers in the house?

Ms Poole: I am not a lawyer, tricky or otherwise. Maybe Mr Tilson -- are you not a lawyer?

Mr Tilson: Yes, but I am not a tricky lawyer.

The Acting Chair: Actually, we noticed that.

Mr J. Wilson: He is a real lawyer.

Mr Tilson: That is right. I am a real lawyer.

Ms Poole: Maybe you could ask Mr Tilson afterwards if --

Ms Donovan: The vendor says to the purchaser: "Look, you want to give me $3.2 million. Give me $4 million. I'll take back the balance in some low-interest vendor take-back mortgages for a couple of years. You can pass all the cost on to the tenants and you'll actually be better off by giving me $4 million than giving me $3.2 million."

The Acting Chair: Sounds pretty tricky to me.

Mr Mammoliti: You should have been a lawyer.

Ms Donovan: It is very tricky and I am quite sure that a lot of people are familiar with the whole way it is done and I do not propose to try and explain it to you in detail here.

Ms Poole: No, I was not even aware of that happening.

Ms Donovan: I can refer you to some tricky lawyers who can explain it to you.

Ms Poole: That is right. I just hope you have not given any tricky landlords and other tricky lawyers some ideas about this.

Ms Donovan: No, they have known about it for a long time. Believe me, they all know about it.

Ms Poole: I guess they just have not told the rest of us.

Ms Donovan: The landlords have a little network that keeps them informed about how to get past the rules of the rent regulation act.

Ms Poole: Okay, if we think of any tricky way to deal with that, maybe we can get --

Ms Donovan: I will be back when you are doing the permanent legislation. I will write some very interesting regulations for you.

Ms Poole: I appreciate that.

The Acting Chair: Mr Tilson.

Mr Tilson: No, I would not dare ask any questions.

The Acting Chair: Look at that. You have tricked him.

Mr Tilson: I do thank you for your presentation and certainly its comments, which we in our caucus will look at. Thank you very much.

Ms Donovan: I certainly hope so.

Ms Harrington: Can I say a word? I just want to thank you very much for coming. Our colleague Gary Malkowski, I remember speaking to him last week and he told me to watch out for you, that you would really be helpful.

Ms Donovan: Yes.

The Acting Chair: Thank you for coming. We do appreciate your brief and thanks very much for your time and effort.

Ms Donovan: I think you have 10 minutes left on the clock.

The Acting Chair: Well, we are just going to move right along, because you never know with this group where we could stumble.

Ms Donovan: Thank you.

Interjection: You are doing a pretty good job.

The Acting Chair: No, I think we are complete with that one. We will move on to the --

Ms Poole: Mr Chair, just on a point of information, committee members might notice the appended petition from tenants and they might be very interested to know that Ms Ward and Mr Malkowski support their government's action, because their names are on the petition, so I am glad to see your vote of confidence.

Ms M. Ward: We were at the tenants' association.

Ms Donovan: They were guests at the conference, so they signed the petition along with the other people.


The Acting Chair: Thank you very much. The next presenter -- even though we are a few moments early, we will carry on, I think -- is the Simcoe County Tenants' Association. Is there someone here from that organization? No? Do not go away, Mary Jo, we might need you.

Ms Donovan: I will come back and fill in some --

Mr Mammoliti: I can talk for 10 minutes.

The Acting Chair: Yes, we know, George. We do not want to hear it.

Ms Donovan: If you want to ask me some more questions, I am willing to sit down again.

The Acting Chair: Okay, well, is there anyone out there from Simcoe County Tenants' Association?

Mr Hale: We could not find anybody.


The Acting Chair: Okay. Is the Council of Ontario Construction Associations here, represented? Are you ready to go?

Mr McFadden: Yes, we would be --

The Acting Chair: I would think, rather than break, committee members might like to proceed.

Mr Tilson: If they are ready to proceed, I am certainly prepared.

The Acting Chair: The presenters are -- and we do appreciate your being prepared to go early -- the Council of Ontario Construction Associations and Provincial Building and Construction Trades Council of Ontario. You were scheduled for 4:40, and there was a 40-minute time slot, with 20 minutes for your presentation and leaving 20 minutes for questions from members of the committee.

Once again, we appreciate your going early and would appreciate it if for purposes of Hansard you would introduce yourselves and proceed with your presentation.

Mr Koskie: Thank you very much. We are distributing to you copies of an appearance sheet. My name is Raymond Koskie and I appear as legal counsel on behalf of the Provincial Building and Construction Trades Council of Ontario and also the Council of Ontario Construction Associations.

With me are Jim Abraham, an officer of the Council of Ontario Construction Associations, and David Surplis, president of the Council of Ontario Construction Associations. There should be another person here shortly appearing with me on behalf of the Provincial Building and Construction Trades Council. Also with me is Michael McFadden of my law firm.

We welcome the opportunity of being able to make this submission before you this afternoon, and we know that you have many others before you and we will attempt to be as brief and succinct and to the point as possible.

In the brief which we have filed with you, dated 11 February 1991, if you will look at page 9 of the brief, you will see the conclusion first; it is perhaps an odd way of starting, but I think that the conclusion and in particular the quote very well and succinctly put our position before you today. We are of course referring to the policy release of the Honourable David Cooke, Minister of Housing, on 22 January 1991, and we quote with much enthusiasm his phrase: "This is necessary work. It will enhance our communities and improve the quality of many people's lives. The best news is that it will create jobs almost immediately." Of course, that was a reference to the release of $35 million to be spent on improving Ontario's housing supply, more specifically with private rental units and older low-rise buildings. But I think that quote quite aptly puts our position before you and you will see that unravel very shortly.

If you will go to page 1 of the brief, I would now just like to tell you very briefly who we are. As I said, the participants in this brief are two organizations, the Provincial Building and Construction Trades Council of Ontario and the Council of Ontario Construction Associations. The first one is a council of trade unions primarily involved in the construction industry and the second is a council of employers' organizations or associations representing employers in Ontario's vast construction industry.

As you can see, this is a joint brief and I think it is refreshing that we have labour and management working together on an issue that is very crucial to them. The provincial building trades council, the union side, represents over 100,000 construction workers in our province. COCA, the employers' association, represents 46 construction industry employer associations in this province and that would involve some 38,000 construction businesses in the province. So you can see, and I think it is safe to conclude, that jointly we represent the construction industry in this province today.

I think it is important that we have a look at the construction industry very briefly to appreciate the vastness of this industry. We maintain that the construction industry is one of the largest, if not the largest industry in this province, and as you can see, in 1990 alone the value of the construction activity in this province was worth $40 billion.

Dealing more specifically with the residential sector, you can see that in the years 1988 and 1989, $21 billion was the value of the building permits issued in those two years. So you can see that the residential sector, and that is of course what we are dealing with today, represents a very significant part of Ontario's construction industry.

More specifically, we now refer to residential repair work, and to quote the definition of that phrase used by Statistics Canada, that means maintaining the operating efficiency of existing structures. You can see the amounts that were spent in that area. For example, in 1987, $420 million was spent and more recently, up to 1990, we have $600 million being spent. So you can see that landlords in this province have increased their expenses in regard to residential repair work by some 45%, looking back at 1987. Now that $600 million, as you will shortly see, equates to 15,000 jobs in the construction industry in Ontario, 7,000 of which would be direct construction jobs. The remaining 8,000 would be employment with respect to related industries in the construction industry.

We are here talking about the structural integrity of existing residential high-rise structures and the structural integrity we are talking about is the building envelope, not just the restoration of concrete garages. We are talking about the restoration of electrical, mechanical, work in windows and balconies and things of that nature which the professional engineers describe as the building envelope. We have an expert independent opinion attached, and tabbed too, from the consulting engineer firm of Morrison Hershfield Ltd, and I will be coming back to that shortly, but their opinion is that approximately $2 billion has to be spent each year to maintain the structural integrity of the existing residential high-rise stock in this province. As you can appreciate, that is very substantial.


In the next paragraph we deal with jobs and, of course, that is one of the main reasons we are here, to talk about what Bill 4 means in the form of loss of jobs for the construction industry. Taking $2 billion as the required expenditure, that translates into 50,000 full-time jobs in this province, a very significant number, and that involves both direct jobs in the construction industry and jobs in related industries.

Every $100 million that is spent on repair creates 1148 direct construction jobs and 1387 jobs in related manufacturing and services. All of these data, I should tell you, are hard data and are supported in the main by Statistics Canada, as you will see in the footnotes. They are all independent government data which we are relying upon in our submissions.

The $2 billion required in the restoration work means the creation of 22,960 construction jobs and 27,740 related jobs, which gives you the total of 50,000 full-time jobs that I alluded to earlier. So that is what we are talking about in terms of potential employment in this province.

In the next paragraph we deal with the unemployment situation, and I think, in a nutshell, it is staggering in this industry. As most of you know, the construction industry has been among the hardest hit in the unemployment area. Just to give you an example of the numbers we are talking about, in 1990 the construction industry employed an average monthly number of 324,000 workers in this province, but during that same period, 47,000 workers were unemployed.

If you turn over the page, you will see a chart we have prepared which shows the dramatic increase in unemployment in the construction industry in this province. In the bottom left, you will see that in 1989, we were riding a boom. The unemployment rate was 7.8%, and thereafter, when we pick it up in May 1990 and end up in December 1990, you can see the gradual increase in the unemployment rate ending up in December 1990 at 20%, a rather significant number.

In addition, you have in front of you a letter which we have filed with you, dated 11 February 1991. This is a letter from one of the larger construction unions in Ontario, the Labourers' Union International of North America, Local 183, signed by its business manager, John Stefanini. This will very succinctly tell you the bleak picture that exists in the unemployment rate in the construction industry. For example, during the boom period, 7000 members of just this one union were employed in residential construction; now there are fewer than 1000 persons.

Of course, not all of these persons are employed in concrete repair or restoration work in apartment buildings, but as Mr Stefanini concludes in his letter: "The wholesale collapse of residential construction employment is attributable in part to Bill 4. Local 183 members perform essential concrete restoration work on residential parking garages and building exteriors. This work has virtually disappeared since the government's announcement of its intention to proceed with Bill 4."

I think that is direct and hard evidence from one of the, if not the largest union involved in the construction industry in Metropolitan Toronto, that its members' unemployment has clearly been affected by Bill 4.

I would now like to talk about the structural integrity of the rental housing stock in Ontario. You can look at page 4, subparagraph (b), of our brief. I am not going to read it all to you, but I think it is safe to say that we have a lot of apartment buildings which were constructed in the early and mid-1950s, and because of their age, we find that they are in a state of advanced deterioration. That involves all aspects of the building envelope, not only the concrete part, but, as I said, the electrical, mechanical, windows, balconies etc.

As confirming evidence of that, you might be kind enough to look at tab 2 of our brief, which is an independently solicited report from the Morrison Hershfield Ltd consulting engineer firm. This company makes it quite clear -- and I will leave that to you for your reading, but the thrust of the report is that all of these buildings in Ontario are in desperate need of repair, not minor repair but structural repair. If you look at paragraph 1.1, the second paragraph, about five lines down, the author of this report makes it clear that these repairs could not have been foreseen when these buildings were constructed.

I know there has been a lot of criticism that perhaps the builders of the buildings should have known when they put up these buildings in the 1950s that they would need this kind of major renovation around this time. That is not so, I think, because the high-rise construction industry really had its beginnings in this province in the 1950s, and of course many of the materials were relatively new at that time. They were not constructing sealed buildings. They were basically concrete-formed buildings which had never been used on high-rise construction or had been used very little. So in a way there was a lot of innovation, a lot of experimentation.

These people did not know, nor did the engineers who designed the buildings know, that 20 or 30 years down the road these buildings would deteriorate to the extent to which they have. You can see over at page 2 of this report, in paragraph 2.1, the author concludes that part of the paragraph by saying that almost two thirds of Ontar-io's construction apartment units were constructed in Metro, and that those buildings now require considerable capital expenditures to maintain safe, habitable living conditions.

He goes on to talk about the various problems, the building characteristics, the problems. Again, he refers on the bottom of page 2 of this report that the problems dealing with the structural integrity of these buildings did not come to the forefront until the 1970s. In fact interestingly, the building code, which governs the construction of these buildings now in the province, was not amended until 1987, which of course would reflect more accurately the improved methods of construction which would be required to maintain the integrity of the buildings and requirement of new and different materials and procedures.

I think it is clear that, judging by the legislation itself and the evidence of the engineers, none of this really could have been foreseen. In fact the previous government had a report which I think was referred to you earlier. The Ministry of Housing issued a report in 1988, and we referred to that in our brief, talking about the deterioration of the garages and the urgency to have those garages repaired. That is the Report of the Advisory Committee on the Deterioration, Repair and Maintenance of Parking Garages. So we have had a lot of action going on in the past year or so, when all these problems were brought to the forefront.

Getting back to page 5 of the brief, we talk about the building envelope as being part of the area which requires these repairs. Interestingly, we find that in Ontario, at least in the last census done in 1986, 62% of the tenants lived in buildings that were more than 20 years old. In 1991, of course, that percentage would obviously be increased quite substantially. We then referred to the Ministry of Housing report talking about the structural deficiencies of the garages, which would cost $1 million to repair.


I think also that the problem of deterioration is one which should be of concern to the tenants. After all, the buildings are there for the comfort and enjoyment of the tenants. When we talk about the building envelope, the walls, the windows, the balconies, the electrical and mechanical systems, becoming seriously deteriorated, these are things which have a direct benefit not only to the landlord but clearly to the tenant and the comfort of their occupancy of the suites in those buildings. Unless there is something done immediately to improve that situation, I think that future generations who come to occupy those buildings will be faced with buildings of even poorer quality, something which I do not think any of us want.

Having given you some of the background, we have some recommendations to make and we like to think that they are somewhat innovative. We like to think that they are a responsible response to some of the problems. I think that one of the objectives we view in rent control is the preservation of the province's housing stock. One thing is to provide accommodation for tenants; on the other hand, one has to always be cognizant of preserving that housing stock for future generations. We respectfully suggest to you that rent regulation must therefore guarantee not only control of rent but the structural integrity of the rental accommodation.

We also point out that the regulation of rental accommodation not only affects tenants and landlords, but also affects those who are involved in the repair, the restoration and the upgrading of the current stock. This whole area is a vital economic activity in this province and is particularly vital to the livelihood of the many construction workers we have in this province and their families.

We are here, ladies and gentlemen, because Ontario's rental housing stock needs work on it. I do not think there is any doubt that it needs work. We have thousands and thousands of construction workers who are sitting home idle today doing nothing, people who have been specifically trained to perform the skills in this particular industry. On the other hand, we have the companies, represented by the Council of Ontario Construction Associations and other associations, which have the wherewithal to carry out this work in today's environment but simply cannot do so because of the fact that Bill 4 seems to have put a damper on their efforts.

The Acting Chair: If you would not mind wrapping up, because we do have questions and I think we are over the 20 minutes.

Mr Koskie: Yes. Our first recommendation is -- and we refer to page 7 -- that the Bill 4 should be amended to permit a pass-through cost for necessary repair and restoration of these exteriors, mechanical and electrical systems, and also that this should not be in the discretion of the landlord.

In our second recommendation, we say that these repairs should be as certified by an independent professional engineer and should be as approved by an impartial expert tribunal. We do not suggest setting up a new bureaucracy. We suggest plugging into a tribunal that is already in existence, for example, the Building Code Commission, a full-time commission, a tripartite, impartial commission which conducts hearings already, and the glove would fit our situation. Tenants should have and would have an opportunity to appear in front of that commission in response to a request by landlords for approval of these necessary repairs.

Our third recommendation is that the capital cost for this rehabilitation should be amortized over a specifically defined period, at the end of which the increase the landlord obtained would be removed. That is unlike the current system, as you know. In other words, they could not use that as a base upon which they could add future increases. Once it is properly amortized, then the particular increase that they would be allowed would disappear.

The other alternative on page 9, paragraph 4, is that the government could consider as a stimulus to getting this work going some sort of tax credit to landlords for expenses incurred in this area.

I want to leave you with this one thought, that this industry needs relief but it needs it immediately. If we are to have relief in 1991, we must get on with these projects, because there is a lead-in time required. These things cannot be started with a snap of the fingers. Much work has to be done, lead-in times are necessary, and if it cannot be implemented within the next month or so, then I think this industry will again have lost its momentum for 1991 and the unemployment situation will have deteriorated even further.

Those are my submissions. We would be prepared to respond to any questions you may have.

Mr Tilson: I congratulate you on your report. It is filled with little philosophy and mainly facts, which I think we appreciate.

The most startling suggestion you are making, and I would like you to clarify it, is with reference to the unemployment. We have all seen the statistics that have come out recently showing the tremendous rates of increase in unemployment, particularly in Ontario. When I read your report, you are suggesting that a large percentage of this is attributable to the landlord-tenant problem that is in existence and perhaps even indeed what Bill 4 has done. Is that a fair summation?

Mr Koskie: There have been a lot of allegations to that effect, and I think it is safe to say that a substantial part of the unemployment is related to Bill 4.

You have this letter from Mr Stefanini, for example. His union is a key union involved in residential construction in this province. More specifically, they have a very large component of the membership involved in building restoration. He is giving you direct evidence, saying that Bill 4 to a very large extent is responsible for a large part of their unemployment.

We cannot at the moment put any harder figures on that, but I do not know how much of a red herring that is as to what percentage of Bill 4 --

Mr Tilson: I listened to Mr Cooke who, when quizzed on this sort of area, said: "Oh, it's the recession causing this. It's not Bill 4 at all."

Mr Koskie: I prefer not to get into the issue of whether it is Bill 4, how much is Bill 4, or how much is the recession. The fact of the matter is that we have thousands and thousands of unemployed construction workers who are ready, willing and able to perform this much-needed restoration work, we have the companies which are simply sitting on the sidelines now waiting for some stimulus to get going and doing this work, but what is holding it up is Bill 4. That is the evidence we have. The fact of the matter is that there is very little of this work going on. What is going on is basically patchwork, just the minimum amount of work required by the landlord; it is logical to expect they would do that.

Mr Tilson: Another area was an area that was raised this morning and you raised it a few moments ago: the issue of safety. How dangerous is the situation with respect to these buildings which -- your figure is 60%. I had thought it was 75%. I have been throwing a figure of 75% --

Mr Koskie: Rather than have it come from me directly, we have solicited an independent report from the consulting engineer Morrison Hershfield Ltd, which talks about the fact that the deterioration of the building envelope clearly does affect the safety of the tenants' enjoyment of the building. Here he is stating that. I cannot imagine a better source than this particular report.

Mr Tilson: One final question: It is a question I have asked a number of people today and has to do with the Toronto Star articles over the weekend that referred to the slums in New York, and whether we need to be alarmed that that could possibly occur in Ontario. Continuing with the area you have been speaking about, if buildings are not properly maintained -- can we wait two years, in other words?


Mr Koskie: We are not here to support the landlords. We prefer not to get into a discussion of whether we are going to end up like New York. We do not have the ability to properly respond, except to say that I think the evidence is firm of the need of this type of repair. Whether Toronto or any other area in Ontario is going to end up like New York slum areas, I do not know. In all fairness, we cannot tell you that. I think what is important is that there is a need to improve these buildings, to repair them. I think that is the issue.

Obviously, if buildings are left in a state of disrepair and if landlords walk away from them, the answer is obvious as to what will happen. Whether the landlords will walk away from them is a question which, quite frankly, we do not have the expertise to properly respond to. It is not part of our mandate of either association. Mr Abraham might be able to --

The Acting Chair: I do not know that we need to beat that answer to death. I think you gave a good answer. We will move on to Mr Abel. We have time constraints, and we have a plane to catch tonight as well.

Mr Abel: I have a couple of quick questions and then I will pass the rest of our time on to my colleagues. I make reference to the letter sent to you from the Labourers International Union of North America, the last paragraph. It says: "The wholesale collapse of residential construction employment is attributable in part to Bill 4." Mr Tilson had asked how much Bill 4 is attributable. You did not have an answer. Perhaps you could answer this: How much is due to the economic climate?

Mr Koskie: I cannot at the moment break that down percentage-wise.

Mr Abel: A rough figure?

Mr Koskie: I do not know. We do not have any hard figures on it. Mr Surplis does point out that the restoration industry is a recession-proof industry. It is recession-proof because of the need of this work on an all-year-round basis. Regardless of the recession, this work is vital, necessary. We have how many people in this industry?

Interjection: Around 15,000.

Mr Koskie: Around 15,000 people employed in this province in the restoration industry itself. I think it is safe to assume that most of those people are unemployed now, and clearly it would be as a result of Bill 4, because the work is there; it is not as if the work is lacking.

Mr Abel: Not to get into an argument, but that is not what it says. It says "the wholesale collapse of residential construction employment." We are not talking about restoration here. They claim that residential construction employment is attributable in part to Bill 4. You could not answer Mr Tilson's question as to how much is attributable to Bill 4. You could not answer my question as to how much is attributable to the current economic climate. Excuse me, but in my mind that makes the credibility of this evidence somewhat questionable.

Mr Koskie: In order to explain to you, this particular union is involved in new housing as well as restoration of existing stock.

Mr Abel: But their claim was not pertaining to restoration. I want to make that clear.

Ms Harrington: I would certainly like to congratulate both organizations, management and labour, for working together in this instance. I hope you will continue in that vein. That is great.

We certainly agree that rental stock needs work, and this is a good time to build, while the labour force is available. In my own riding, I am part of a co-op housing project, and this is the time where we can get our lowest quotes, right now, so we should be trying to get people to work in building. Everyone knows the building industry is cyclical, that it is going to pick up again, and much of the downturn -- the question is: How much of it is due to Bill 4?

I would like to let you know of a little incident that happened today. In the hallway at lunch I happened to be talking to one of the presenters from the Concrete Restoration Association of Ontario, which was here this morning. He explained to me that his business, a large portion of it, is in repairing concrete garages, and a substantial portion of that business is in commercial buildings. He volunteered the information -- I did not even ask -- that this repair work was down very substantially in the last few months. These buildings, of course, are not affected by Bill 4. He said -- these are his own words -- they were affected by the recession, and they are not doing this work in the commercial sector.

I would submit that it is very easy for building owners now to say, "We'll delay repairs due to Bill 4." It is an easy way to say it.

Mr Koskie: The evidence we have found with another union, not the one that wrote this letter but one of the other unions involved in restoration, is that 70% of its members was laid off subsequent to the introduction of Bill 4. One has to assume that the layoff was not because of the recession but because of Bill 4. Again, I do not know how much it really makes a difference. The fact of the matter is that the companies are willing to do the work, they want to do the work --

Ms Harrington: We have to get them working. I agree with you.

Mr Koskie: Yes. Is that not the name of the game? I do not know how much we can advance the whole issue by debating what percentage was caused by Bill 4 and what percentage was caused by the recession.

Ms Harrington: I thought I would put that out to you. We agree that the work should be done and has to be done.

The Acting Chair: I would like to point out that we have transportation at 5:30 and it is a quarter to. The Simcoe County Tenants' Association has shown up, so we have another presentation. I will allow you 30 seconds.

Mr Mammoliti: I am curious about what "residential" means. You mentioned residential construction, residential work. Does that mean homes, rental buildings? Does that mean condominiums? What does that mean?

Mr Koskie: The generic term "residential construction" means high-rise buildings, low-rise buildings, and also the repair of those buildings.

Mr Mammoliti: Condominiums or --

Mr Koskie: Condominiums and rentals.

Mr Mammoliti: Okay. It is just that it does not coincide with all these figures you left us, page 2. I think you should be more specific and actually get right to rental buildings. It is kind of misleading. Bill 4 deals with --

Mr Koskie: On page 2, the figure, for example, of $420 million in 1987 is repair of residential tenancy buildings, high-rise buildings occupied by tenants. That is what we are talking about.

Ms Poole: I do not want to belabour the points raised by Mr Tilson and Mr Abel. I just have a statement which you can perhaps disagree with or agree with. Aside from the effect of the economic downturn and aside from the fact that construction is a cyclical business, would you still say that Bill 4 has had a significant impact on employment in your industry?

Mr Koskie: It has.

Ms Poole: Thank you. I just did not want Mr Abel's comments to seem to imply that there is a lack of credibility in this document. I think we have already had evidence to the contrary, and I think your evidence today has been extremely helpful to our committee. I want to thank you.

The Acting Chair: On that note, I would like to thank you for appearing and taking the time, particularly for going out of order. We appreciate your co-operation.

Mr Koskie: Thank you for the opportunity.


The Acting Chair: The folks from Simcoe County Tenants' Association have arrived. We should take no more than 20 minutes in total, 10 minutes for presentation and 10 minutes for questions, as we do have transportation at 5:30 to catch an airplane to Sudbury, so we will have to move.

Mr Bailey: We apologize for being a little late today. We come from up north and I am afraid your traffic problems are a little foreign to us.

My name is Dennis Bailey. I am a lawyer from Orillia and I am a past president of the Simcoe County Tenants' Association. I have, for the last 10 years or so, represented various of our member tenants' associations in various buildings throughout Simcoe county before rent review hearings, appeals tribunals, etc. To geographically orient you, our area includes the major cities of Barrie, Orillia, Midland and Collingwood.

I have asked Janet Buck to come along with me. Janet is the past president of the tenants' association of one of the larger buildings in the city of Barrie. She is an experienced person in appearing before rent review tribunals, and she represents the tenants' perspective from our area. I can tell you that her comments with respect to the need, and I would say the immediate need, for the passage of Bill 4 have been echoed to me numerous times by various tenants' associations in our region.

Without further ado, I would like Ms Buck to indicate to you why her association supports Bill 4.


Ms Buck: Mr Chairman, committee members, the current system has failed the tenants in many ways. We need immediate protection and it has to start somewhere. This two-year moratorium would give us the protection and give us all time to work on a fair rent control system.

I agree with the statement made by the Honourable Dave Cooke: "The current Residential Rent Regulation Act is too complex and too costly. The act should be simplified." Tenants have not been properly educated in this field. We are not big-time developers or fancy lawyers. We are just average people who prefer to be left alone, but when a bomb gets dropped in our laps, we are forced to learn really quick.

And costly: Our building alone has cost the government a lot of money in the past four years. Our building is well known at the local rent review office. We have had three above-the-guideline increases and we are in the midst of our largest, the fourth. You name it, we have been involved in it. Appeals, hearings, phase-ins, whole building reviews, capital expenditures, financial losses -- we have waited up to a year and a half for a final decision on our landlord's application. The Barrie rent review office is really backlogged.

The owners of the 57-unit apartment building that I reside in just completed several thousand dollars' worth of capital expenditures. At the same time, they put up a new 22-unit apartment building in our backyard. I mention this because a lot of the outside work done to our building makes the new building look good, and undoubtedly helps in justifying their asking rents. In turn, they have applied for a substantial rent increase from us of approximately $150 per month per apartment. This may not seem substantial to some people sitting in this room, but to people on fixed incomes or somebody only takes home $15,000 a year, it is substantial.

Well over half the work that was done would go under the heading "Luxury renovation": tearing up our concrete sidewalks and replacing them with Unilock -- $10,000; marble tiling on the lobby floor and around the elevator doors -- $11,000; landscaping like you would not believe -- $13,000; scroll painting -- not just plain painting in the halls, scroll painting -- $17,000. We used to have one lobby with two chairs and a table, and that was fine. Now we have two lobbies full of loveseats, chairs, mirrors, six-foot artificial trees, tables; you name it, we got it. We have all new light fixtures. Nothing wrong with the old ones, but the new ones are energy-efficient. That was over $13,000. There are other things we have never had or needed before like end panels on all the balconies, curbs around the parking lot, a fence, a lighted canopy out front. A large percentage of the balance of the work done would go under the heading, "Needed due to neglect of maintenance."

We paid guidelines increases every year, but where did this money go? It is extremely difficult, almost impossible for a tenant to prove neglect of maintenance. All of the figures are in the landlord's hands. Even if we could prove it, there would be no reduction in rent, maybe a minor offset in the next rent increase.

Our building has been poorly maintained and badly neglected since it was built 22 years ago. I am not joking when I say that a typical repair would be to run out and buy a roll of duct tape to tape up the frayed and ripped carpeting. Landlords are not stupid, nor are they in the business to be good Samaritans. If I was in the business, I would probably see and take advantage of the loopholes too. After all, why should landlords use their revenue from annual guideline increases to repair things when they can wait a few years, neglect them and then replace them under capital expenditures at the tenants' expense? This is one reason why we need to work on a new system and this two-year moratorium is a good start.

Prior to any renovations or repairs done to my building, the majority of the tenants advised the owners by way of surveys that over 80% of the work they had planned was not needed or wanted. They did not even consider our views. That is not to fault anyone. Why should they? They knew under the present act they could do anything they want with the building and benefit in two ways. One, the value of the property is now substantially higher and two, they can collect, although it has not been approved yet, $85,000 more a year in increased rents.

What we needed was for someone to step in prior to the start of a new renovation, possibly a government-appointed mediator, and say, "Look, Mr Landlord, if you want to do this, that and the other you're going to have to do it at your own expense. There's no need for these things, therefore we're not going to expect the tenants to help you pay for them." A mediator is just one suggestion. We need communication between the landlords and the tenants. Have us working together. Our landlord would not even talk to us.

Why can landlords not set aside part of annual increases for major repairs down the road? I do that for car repairs. Why can they not take surveys like we did? That does not take much time or effort. Get the tenants' consent prior to any renovations or repairs and advise them of the extent of the rent increase. If we say no, get the mediator.

Something else to look at would be licensing landlords. If landlords knew they could have their licence revoked for collecting illegal moneys or sending out fraudulent letters like ours has done to us, I am sure they would reconsider. I am one person out of many that would be directly affected by the implementation of this two-year moratorium. If it is not implemented, my landlord can pass on to me all his renovation and repair expenses that I mentioned before.

I cannot stress enough the impact this would have on my life. It is one thing to have to pay for needed and necessary repairs. But to pay for extravagant luxuries or unneeded renovations and possibly be forced from my home is another. I have been a tenant for 16 years, 8 in a mobile home and 8 in an apartment. The mobile home story would take another 10 minutes, so I will not get into that. I would like to say that amending the definition of "rental unit" to include rental sites is long overdue. I have many friends who are still in the four different mobile homes parks that I lived in.

All I can say is that when I first became a tenant in an apartment building, I thought I had jumped from the fry pan to the fire, but that is not the case. They have had their share of major problems too. I hope there is no one in this room with the same opinion as our landlord has, "If you don't like it, move." I like the building I live in. I liked it before the renovations started. We have built up an organized tenants' association. It is close to shopping and my work.

I do not want to move, nor can I afford to move, and I am afraid to move. In the building I move to it could start all over again. It could be one without an organized tenants' association. With proper protection we might not even need a tenants' association. Hopefully this moratorium will be implemented, and implemented soon. The longer the delay, the more confusing it gets for everyone.

We do not want to do battle with anyone any more. We just want to be left alone but treated fairly. As I said before, it is the unneeded, unwanted, unauthorized repairs and renovations we object to. If major repairs are necessary, that is a different story and one that could be worked on once the two-year moratorium is up. You must see the need for a new permanent rent control system. This two-year moratorium is exactly what is needed. We need your help and we need it now. We are the closest we have been to a fair rent control system. We are just your decision away. Thank you.

Ms Poole: I just want to thank you very much for your presentation today. A number of points that you have brought out, for instance, about luxury renovations and about ongoing deliberate neglect, are extremely valid and extremely, I think, apropos as to why something does need to be done to the system.

I do have a personal problem with the fact that there is no provision in Bill 4 whatsoever for necessary major repairs during this two-year period or however long the moratorium lasts. Also there is nothing to deal with a penalty for landlords who have engaged in ongoing deliberate neglect and in fact ignore work orders. Those are just things that I feel might make Bill 4 better for tenants, and I would like your comment on that.

Ms Buck: Tenants have been victims for four years. There are a lot more tenants than there are landlords. We have been paying increases for the last four years -- well, since 1986 -- that sometimes were unjustified. We were not organized enough to go to rent review and fight these things. There has got to be a victim somewhere and we have been victims for four years. Yes, there probably will be victims with this, but it is only for two years.

After the two years, maybe in the next one -- not this one, we need this passed -- but when the new legislation comes out, there should be something to say, "Any of the landlords that got stuck in the middle and have receipts and can prove that they put necessary repairs into the building can apply for a moderate increase," when that time comes. But we do not want to hold this moratorium up. In the new legislation, yes, maybe have something like that.

Ms Poole: The things I am suggesting would not hold up this legislation by one day. It could be incorporated by this committee when we do our clause-by-clause next week.

Ms Buck: It may seem simple, but it would really take time to consider. How would a tenant prove that these repairs were necessary? That is going to take some doing. I think if you put it in there now, they can get a moderate increase. First we have got to figure out what "moderate" is, and then what are "necessary repairs." The landlord told us all this stuff was necessary, but it is not.

The light fixtures were for their benefit: $17,000 worth of light fixtures that are energy-efficient. We did not need them. They are going to save on hydro and bulbs. They are going to say, "Yes, we needed them." So it is really going to be hard to prove and it is something that would take maybe two years, during this moratorium, to work on. I cannot see it being in, but maybe you can. I do not know.

Mr J. Wilson: As a tenant in Collingwood, I guess I fall into your association. Our party has been throwing around the idea of a democracy clause, which is following along the line you were just speaking about. I am just wondering whether you think it will work. Our idea is to somehow get tenants and landlords together. We could legislate that they would have to get together, and only the necessary repairs that the tenants would agree to -- and it may take third-party mediation too -- would be allowed to occur.

I do not think we can assume that all landlords that appeared before us were bad landlords. We had, I think, quite a few legitimate landlords appear before us, and they are real concerned that there are large capital costs now being incurred in old buildings that they will not undertake because they feel they cannot afford them or they cannot pay for them. The committee itself is caught in a bind in the sense of trying to come up with a solution. Do you think that would work? For instance, you mentioned your landlord has never met with you. If there was provision that he could not possibly even ask for an increase unless he got your agreement on necessary capital costs, structural improvements, that is worth pursuing, we think.

Ms Buck: If they were told they had to discuss things with us, they would have to. They would talk to us. But that was never written before and if we called them, they just never returned our phone calls or never acknowledged our surveys that they got or anything. I think that would work.

Mr J. Wilson: Second, in dealing with a lot of people, particularly in Collingwood, where the recession has been extremely hard on us up there, there are a lot of people who cannot even afford their current rents. In my building tenants are clearly frustrated by a proposed rent increase. For instance, in my building there are probably two tenants in there who would qualify for some sort of subsidy that currently, under all the existing welfare and social services, they are not able to do. What do you think of subsidies to the people who need it, people who are paying over, say, 25% or 30% of their gross income on rental accommodation?

Also, the government is going to say, "Well, that's nuts," because then it is a licence for the landlords to print money. Obviously, as part of that package, we would have to consider some reasonable caps on landlords, so that they are not just given a licence to print money, which I thought would have been implied.

Mr Bailey: Are you talking about that kind of a system to augment rent controls or replace them?

Mr J. Wilson: Well, you know, rent controls do not seem to be working. The old system does not work. I will be interested to see what the government comes forward with on new ones. We are willing to participate on the committees and see if we cannot hammer out a better system, but it is not clear at this point whether you would do away with rent controls or phase them out in favour of subsidies. It is something that I think should be looked at seriously.

Mr Bailey: I can tell you that our association is definitely not in favour of the elimination of rent controls. If what you were talking about was something to augment the more pressing cases of people who, notwithstanding rent controls, are still paying an exorbitantly high percentage of their income, then the answer is yes, in principle that is a good thing.

Mr J. Wilson: But keep it regulated.

Mr Bailey: One would have to do a cost analysis, I would think, of that kind of thing. But there already are similar programs to that. I mean, non-profit housing in essence is an answer to that, although it does not offer people the luxury of staying in the same premises. They would have to live in non-profit housing.

Mr J. Wilson: Yes, they would have to move.

Mr Bailey: That is right.

The Acting Chair: Thank you very much I have other questions, but thank you for coming. We appreciate your taking the time to fight the traffic and get here.

Mr Bailey: Thanks very much,

The Acting Chair: To members of the committee, the transportation will be outside the main door at 5:30. This committee stands adjourned until tomorrow morning at 9 o'clock in Sudbury.

The committee adjourned at 1705.