Monday 21 January 1991

Residential Rent Regulation Amendment Act, 1990, Bill 4

Ontario Chamber of Commerce

Multiple Dwelling Standards Association

Fairwin Investments Ltd

St Andrews Tower Tenants Association

Barbara Carpenter

North York Interagency and Community Council

Centre for Equality Rights in Accommodation

Honourable Martin O'Connell

Don't Empty Mimico Apartments

Bretton Place Tenants' Association



Acting Chair: O'Neill, Yvonne (Ottawa Rideau 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)

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

Turnbull, David (York Mills PC)


Cooper, Mike (Kitchener-Wilmot NDP) for Mr Abel

Dadamo, George (Windsor-Sandwich NDP) for Mr Mammoliti

Mahoney, Steven W. (Mississauga West L) for Mr Mancini

Winninger, David (London South NDP) for Ms Harrington

Clerk: Deller, Deborah

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

The committee met at 1304 in room 151.


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

The Vice-Chair: Good afternoon and welcome to the second week of public hearings on Bill 4. The standing committee on general government will be conducting these hearings for the next little while.


The Vice-Chair: Today our first presenter is from the Ontario Chamber of Commerce. Introduce yourselves to the committee and the positions that you hold within the organization so that Hansard will be able to keep track of who is who. You have a total of 40 minutes: 20 minutes for your presentation, followed by 20 minutes of discussion with the committee regarding your presentation, which is split evenly among the three parties. Welcome to the committee.

Mrs Matthews: Thank you, Mr Chairman. I will take the opportunity to introduce our delegation. My name is Linda Matthews. I am chairman of the board of the Ontario Chamber of Commerce. My employer is Royal Insurance. On my left is Don Eastman. Don is the chairman of the chamber's economic policy committee and he works with Dofasco. At the end is Bill Cook, who is a member of the economic policy committee. Bill is a financial management consultant.

We are very pleased to be here today. Thank you for the opportunity. We are here to represent our members' views. Our members include 165 local chambers of commerce and 65,000 business members. The unique character of the Ontario chamber is that the organization represents the broad voice of business in the province. Our membership consists of single-owner businesses up to the largest companies in the province. These members also represent every sector of the economy, from a florist's shop in North Bay to a construction company in Sudbury to the IBM office in Toronto, and yes, some of our members are landlords and developers. But our strength is that the Ontario Chamber of Commerce represents business interests from all sizes, all sectors and all parts of this province.

We regret that we do not have a written copy of our comments today, but we will make those available to the committee. Our understanding is that might be a positive on our side rather than a negative, that you do not, at least yet, have another brief to read. I will now turn over our comments -- which will cover two areas, first the Ontario chamber's position with respect to rent controls -- to Mr Eastman, and he will then turn it over to Mr Cook on specific comments on Bill 4.

Mr Eastman: I would like to begin with a quote from George Bernard Shaw that seems to be particularly appropriate when you are looking at rent control legislation, "A government that robs Peter to pay Paul can always count on the support of Paul."

The Ontario Chamber of Commerce has consistently opposed rent control legislation in this province. That is not going to come as any particular surprise to any of you. We have also consistently recommended rent assistance for those who arc in need. The benefits that rent control legislation arbitrarily confers on renters bears no relationship to need, and in fact rent control legislation is seriously aggravating the accommodation prospects for those who truly are in need of low-rent housing.

Rent control is the systematic expropriation of property and property rights without compensation. Rental income that would have been taxable in the hands of landlords is being transferred tax-free into the pockets of tenants, regardless of their level of personal need.

Let's look at the results of rent control legislation. I want to look at this in the context of several stages of these impacts. In the first round the impacts are, initially, reduced landlord income and, accompanying that, a reduction in both federal and provincial government revenue from income taxes. That is followed relatively quickly by second-round results: sharply curtailed construction of rental housing. The legislative history of rent control in this province has provided a consistent message to builders and potential landlords that the province is prepared to change the rules arbitrarily and even retroactively to seriously limit the opportunities for earning a fair return in the rental housing market while encouraging losses.

Also in the second round we have the search for legislative loopholes. The whole sad story of the Greymac Trust debacle and the apartment flips that lay at the heart of it was rooted in the provincial rent control legislation that made it impossible to realize the underlying value of those buildings unless they changed ownership.

Rent control legislation has also been the root cause of a number of conversions of rental properties to condominium units, and we have also seen the physical destruction of rental units so that they could be replaced by new condominium or other buildings in order to realize the underlying value of the land.


Next comes the third-round impacts. We have, first, a tightening of the rent control legislation to restrain the so-called abuses, and the abuses are again blamed on the oversights and omissions in the original legislation. The possibility that the core premise of the legislation is wrong is not considered. We have a further decline in the construction of rental units. No reasonable expectation of return, no construction.

We also see that the normal turnover of rental units is sharply reduced. Increasingly, tenants who are enjoying a significant rent control subsidy are economically locked into their units. Consider that a $200-per-month rent control subsidy gives a tenant roughly a $25,000 equity position in that apartment, an equity position that is abandoned if he moves out of that apartment. As a result, instead of moving up to larger, better rental units or out to their own accommodation, they stay. The turnover that should be characteristic of the rental housing market has been largely eliminated.

Also in the third round we see an increasing shortage of rental accommodation, particularly at the low end of the price spectrum, due in large part to the factor I just indicated.

We also see the curtailment of municipal revenues. With market value assessment, the reduced earning capability of apartment buildings is reflected in reduced market values and reduced municipal assessments.

That then brings us to the fourth round, which is a government that increasingly feels it has to step in to provide subsidized and public housing, usually inferior, because the rental housing market is being forced to fail. Anybody who thinks that rent control legislation and the process that it led to serves those in need is tragically mistaken.

With that overview of how we feel about rent control, I would like to pass it on to Bill for some of the specific comments on Bill 4.

Mr Cook: I am a financial management consultant and a member of the economic policy committee. It has been my role to develop the position of the Ontario chamber over the past several years on rent control. We see this particular bill as tightening up the controls that have already been put in place and therefore exacerbating the problems that Don has just iterated.

A seminar on rent controls and the international experience, held at Queen's University in 1988 and published in this booklet, demonstrated the effect that rent controls have had in various areas throughout the world over the past decade and more, going from Los Angeles, where they have had mild controls, and still have, which have caused some irritating problems in the rental accommodation market, to Ontario, which up to now has had fairly moderate controls which, as Don has mentioned, created significant negative interference in the housing market. Now it looks like we are going to an area of more strict controls. New York City, the United Kingdom, Sweden, Israel, Paris, Cairo have all demonstrated that strict controls severely impede the functioning of the housing market as well as the labour market.

We have seen instances here in the past several weeks of people being put out of work because of the uncertainty caused by this pending legislation, in particular the retroactivity, whereby not only do we have a two-month retroactivity clause in part VI-A of the bill which prevents any increases coming into effect for modifications and upgrading of housing effective back to the beginning of October, but this retroactivity provision is even applying to landlords who had previously made application, as long as what they had made application for was for rents commencing after 1 October. The uncertainty that this has caused and the signal given of the tightening of the controls have already created hardships in the construction industry, as well as possibly leading to further problems in the availability of rent, although with the economy in a difficult situation we have seen that vacancy rates have increased lately.

Those two items are our main complaints about this particular bill. We do not like rent controls in general, but we do not like to see the tightening that is coming up due to this bill and we do not like to see the retroactivity.

Mr Eastman: In closing our formal remarks there is one other consideration that I would like to leave you with and that is, even prior to the current recession we in the chamber have seen a serious erosion of business confidence that it makes sense to be in business in Ontario. I think that is regrettable. That loss of confidence has some very direct implications for the number and quality of future job opportunities in this province. Rent control legislation seriously affects business perspectives of this province and how it will be treated by this government, and that is true even for those businesses that are not directly involved in the rental housing or construction markets. Thank you.

The Vice-Chair: Thank you. Is it the pleasure of the committee we divide the remaining time evenly? I presume it is. Mrs Poole, do you have some questions?

Ms Poole: Yes, thank you, Mr Chair.

First of all, I would like to thank the chamber of commerce for your presentation today and for a specific perspective. Have you done a survey, whether formal or informal, of your members to indicate what impact Bill 4 would have on them?

Mr Eastman: No, we do not have any formal survey. We have had some informal feedback which has been, frankly, quite negative.

Ms Poole: But you have had anecdotal experiences related to you by some of your members.

Mr Eastman: Yes, there has been some that has been fed to us. It certainly has got their attention.

Ms Poole: You mentioned the loss of business confidence that has been engendered by Bill 4. How widespread has it been since the bill was first announced? Do you, for instance, have members of the chamber of commerce come to you and say, "We don't plan to pursue business in Ontario," or that they see at some future date that they will be pulling out? Has it come to that stage or is it a general mumbling saying, "We don't think this is good legislation"?

Mrs Matthews: Actually, we are in the process of collecting that information. We have put a call out to our members to get a sense of what is happening in the local communities. As I mentioned in my opening remarks, with 165 local chambers and 65,000 business members, it is not a simple task of just a few phone calls. We like to get the input of our members, and unfortunately the time lag of doing that sometimes does not allow us to have those answers when we come to presentations. But we are in the process of collecting that, yes.

Ms Poole: It appears from presentations that have been made to our committee that the retroactivity clauses are far more widespread and far more excessive than originally believed. The original idea was that it was for rent increases that would be effective as of 1 October, but when one looks at the chain and how rent review works, it becomes apparent that it is not 1 October, because first of all, if they did capital repairs, the landlords would have to have applied it by 1 July, given the 90-day notice. Not only that, they would have to have substantively completed the construction work and the capital repairs before even making application, so the retroactivity in that case and in the case of financial loss could go back a year, two years, even three years in some instances.

Mrs Matthews: For the process.

Ms Poole: In the process. Would you like to comment on the retroactivity, whether you, in your many years in the chamber of commerce, have ever seen legislation that would have retroactivity that went back that far in history and into another government's mandate, or if you have any comments to make on the retroactivity in general?


Mrs Matthews: Certainly from a philosophical position retroactive action is just the bane of the business community. Current economic times are uncertain enough, but when you think you have the right to proceed with certain actions that require you to put out substantial amounts of money and to then have that changed is unacceptable to the business community. We cannot function in that kind of climate. It sends everything else into uncertainty as well, as to what other changes might come down the pike. It does have an influencing result on your future decisions.

Ms Poole: So you feel that in a very widespread way it has sent out a dangerous signal to the business community.

Mrs Matthews: A negative signal, yes.

Ms Poole: In your presentation you mentioned a question that you felt had not been answered by the government, and that is the core legislation, the rent review system that has been in place in the last five years. Is the core premise of that legislation wrong? Would you perhaps like to give your comments on whether you feel the system we have had in place for the last five years, with all its warts and maybe loopholes, could be workable, and whether you as a chamber of commerce would agree with the basic principle of it?

Mr Eastman: We believe that the premise is fundamentally wrong regardless of which way you have it. If you have it in a mild form which confers relatively little, in quotes, benefits to the renters, it does less harm, but it still does harm. If you want to have a functioning rental market, then I think it is important to reconsider the whole rent control legislation. The objective in the first place presumably was one of meeting the needs of low-income people who had requirements for accommodation at reasonable prices. Rent control legislation is the wrong way of solving that problem.

Ms Poole: I think Mrs O'Neill has a question as well.

Mrs Y. O'Neill: I just want to go back to your statement about the data you are collecting. I hope, first of all, that you are going to present your remarks in writing and that you will be presenting to this committee the data that you are in the process of collecting, because we are certainly not complete with these hearings this week and it would be very helpful, before we get to clause-by-clause, to have the data you are collecting.

Mrs Matthews: Yes, we will attempt to get you as many concrete examples as we can.

Mrs Y. O'Neill: If it is an interim report, that would be satisfactory as well.

Mr Tilson: Hopefully the second to last statement made by you would influence the Liberals to change their support of this legislation, because, as we know, they did vote for it. I happen to agree with many of the things you are saying. I would like you to comment specifically. Several people making submissions to these hearings have commented on the issue of refinancing, specifically for the need for capital investment or capital renovations or just general refinancing. Many of them have expressed difficulty in obtaining this refinancing from institutions. Do you have any facts or information that would support or deny those comments?

Mr Cook: Those are some of the facts that we are endeavouring to obtain from our members. Theoretically it makes sense, obviously, that if it is likely that the housing stock you now own is going to deteriorate because you cannot recoup your expenses in renovating, then the lending institutions are going to be less willing to provide you with financing to maintain those.

Mr Tilson: There have been other statements made -- I guess I am looking for your reaction among your membership or feelings that you have had from calls that you have had as to specifically supporting or not supporting the statements that have been made to these hearings or in correspondence that we have received -- that there have been substantial job losses, already and projected, and that there has been substantial loss of contracts, actual and projected. Do you have any information on those that might assist us?

Mr Cook: Once again we have feedback from our members in general terms. I know personally of a couple of owners who have not gone ahead with projected renovations in their buildings and therefore have not provided jobs that they had anticipated providing in 1991, and are waiting to find out whether or not this legislation is going through and what in general is going to happen. The responses I am getting are that this is a supposedly interim piece of legislation that has a sunset clause in it, so in 1993 this clause will be done away with and at that time there will be something new and different to replace the present rent review act. The people I have talked to are waiting until that time before they decide what they are going to do, if they can afford to wait.

Mr Tilson: You commented in one of the earlier questions with respect to feelings that you have had among the investment community, at least within and without the province, as to investing in Ontario. Have you had any specific comments made by investors with respect to their reaction on Bill 4?

Mr Cook: I have had one comment from a person who has heavily invested in rental accommodation in Toronto who has simply stated that he is not putting any more money into that sector of the economy. That is all.

Mr Tilson: It has been stated that there is a percentage of well-off tenants, people who are very well off, who are receiving benefits from this rent control legislation on the one hand, and on the other hand there is outright poverty in this province, specifically in the urban areas, where no amount of rent control legislation will help those people; no matter what the rent is, they cannot afford their rent. In your inquiries do you have any percentages or estimated percentages at either of those ends?

Mr Eastman: We do not. We know that it is a factor and that it is out there. We do not have any numbers to put to that.

Mr Tilson: How in your view will this legislation harm tenants, because it has been repeatedly told to us that it is going to be of great benefit to tenants?

Mr Cook: In two ways: One, tenants who have growing families will rent accommodation to suit the size of family they have at the time they obtain that accommodation. If they find themselves in a rent control situation when a member or two additional members of the family come along, whether they be children or parents they have to take care of, when they go to find alternative accommodation they come to the realization that they cannot find anything close to the price or even related to the price that they have because their rent is controlled.

Then they find that they have to live in more confined space because they are unwilling to lose the rent control advantage they have acquired over the several years they have lived with the rent control legislation. Therefore, the families become a little restricted, the whole family unit becomes a little restricted and the economy suffers because then that expanding family is not out on the market looking for more suitable accommodation.

Second, from the landlord point of view with not being able to recoup expenses on maintaining the property or even enhancing the property, this same family finds its housing accommodation deteriorating to some degree and therefore not only are they, if they are expanding, living in more cramped quarters, but they are living in accommodation that is not the quality they would like to have or would have if they were able to simply move and therefore had that threat over the landlord and therefore gave him an incentive to keep the property up.


Mr Tilson: I would agree. The Minister of Housing has repeatedly, in the House and outside the House, stated that the main reason for the implementation of Bill 4 is rent increases that are above the guidelines for luxury renovations, and second, for the flipping of properties that has caused increases. Do you have any thoughts on those types of statements?

Mr Cook: If we had a free economy in housing, landlords who attempted to force unwanted renovations and luxury renovations on tenants would not be able to do so because tenants would have alternatives. They would be able to move somewhere else. They would stay only if they wanted those improvements. Second, there have been abuses definitely documented and those are the kinds of things that get the headlines, but they are really a very small percentage. We do not have the figures to tell you, but it looks as if those instances are a very small percentage of the housing market.

Mr Tilson: This committee has not seen those figures either yet, I might add.

Mr Cook: They would be very difficult to get.

Mr Winninger: I have appreciated your remarks. I wonder if you are aware that when the present Residential Rent Regulation Act was passed on 15 December 1986, many portions of that act were retroactive to a full 18 months before, back to August 1985, including a provision that buildings with rents over $750 would come under rent control and be exposed to only a 4% guideline that year. Did you criticize the government of the day at that time for the retroactive nature of its legislation?

Mr Eastman: I cannot recall whether we dealt with that specific retroactivity. It certainly is a continuing problem. We will not claim that retroactivity is unique to this legislation. I think it is unique in terms of its reach on the capital spending.

Mrs Matthews: I think it would also be fair to say that the chamber's position has been consistent through this whole process of the rent control legislation. We took exception when it was introduced by the Progressive Conservative Party, we took exception when it was extended and we take exception now. Our position has been consistent for the valid reasons that we put forward today.

Mr Winninger: There was a suggestion made, I believe by Mr Eastman, that somehow the advantage Greymac took of the system when it flipped buildings several years ago was excusable because of the rent control guidelines that had been foisted upon Greymac. Is that the suggestion you were making: that somehow they were desperate to find a loophole because of the rent review guidelines that they were controlled by at the time?

Mr Eastman: No, I was not suggesting that created a specific desire on their part. What I am saying is that it created a situation where you have established a market distortion and people try to take advantage of that market distortion. Having basically squeezed the market balloon in one location, having it bubble out someplace else, to then expect that people will not identify that bubble and try to find ways of taking advantage of that is seriously naive. That is not saying that I excuse what was done. I do not. But to create that situation and expect that people will not then try to take advantage of these distortions is naive.

Mr Duignan: Thank you for coming this afternoon. Some landlords have used the argument that they are operating at a loss and basically have no capital reserves to make necessary improvements. Do you honestly believe it is fair to ask tenants to continue to subsidize new landlords, especially after years when they have been paying for maintenance that in most cases they have never received?

Mr Eastman: I think we have taken the subsidy and turned it on its ear when you phrase the question that way. The subsidy that has been taking place has been one of the landlord for the tenant. I think if you then want to have construction, if you want to permit the market to operate, you have to find some way of reducing that subsidy, of finding ways that you can permit active decisions of a business nature to continue taking place.

Mr Duignan: Basically you have not answered the question. Should tenants continue to subsidize landlords for bad business judgements, in some cases bad financial advice?

Mr Eastman: Your premise is wrong. The subsidy is taking place in the other direction.

Mr Cook: How do you feel the tenants are subsidizing the landlord if the landlord is operating at a loss? Are you saying the landlord made a mistake in paying too much for the property?

Mr Duignan: Yes.

Mrs Matthews: Tie one hand behind his back and then tell him he made a mistake.

Mr Eastman: In a functioning market, any tenant who thinks he is subsidizing a landlord is perfectly entitled to move to other accommodation. The fact that other viable accommodation does not exist, I think, is a telling statement about the impact of rent control.

Ms M. Ward: Actually the question that was in my mind when I put my hand up has been effectively asked by Mr Winninger here. When you spoke of Greymac, I was not quite sure what you meant and David asked you if what you meant was that the rent control situation created that. As I recall, Cadillac Fairview sold these buildings to Greymac Trust for $270 million. They sold them to Kilderkin Investments the same day for $312 million. They turned around and sold them supposedly to a group of numbered of companies for $500 million. So we have gone from $270 million to $312 million to $500 million. Your premise is that this was created by rent control legislation?

Mr Eastman: I am suggesting that the only reason people felt that apartment buildings could tolerate a price tag of $500 million was because on an open market the tenants would pay sufficient rent to justify that price.

Ms M. Ward: They were not an open market, though. As long as they could pass that increase on whether it is open market or under rent controls, then this is where the impetus --

Mr Cook: That is correct; because of the loophole we are talking about. The situation was created by the fact that the loophole in the legislation was that they could recoup those amounts based on financing at $500 million.

Ms M. Ward: Could they not recoup them also if there were no rent controls?

Mr Cook: It is unlikely that they would have felt the need to. If it had been an open market and no rent controls, it is unlikely that there would have been a flip. The first sale would have been for the market value of the homes which would have been for whatever rental income could be gained from them.

Ms M. Ward: There were criminal charges laid in that case, so I suspect there was more than those free market forces at play there.

Mr Drainville: You raise the issue of fairness and the fact that there is significant interference on the part of the government in terms of this kind of legislation. The whole question of fairness, of course, is germane to this discussion. So I would like to put the understanding that we presently have a situation, even under rent review, where tenants receive increases of 10%,15% and 20%, yet their increase in terms of their salary is 4.5%, 5%, maybe 6% at the utmost. What of that kind of fairness? Do you think it is fair that landlords have that kind of opportunity, not just one year, sometimes repeatedly year after year, to increase the rents of tenants beyond what they can possibly pay in terms of their own salary?


Mrs Matthews: The use of statistics and percentages has to be taken in context. A 10% or 15% increase on a $600-a-month apartment is different from a 6% increase on a $30,000 salary. I would like to know what the amounts are rather than just using percentages. Maybe the $50 a month is appropriate, even though it is a 10% increase in the rent.

Mr Drainville: The point that I am trying to make is that there are many tenants across the province of Ontario who cannot afford to pay those kinds of increases each and every year. You say you need to have precise examples. What I say to you is that most tenants in Ontario do not have the capacity to be able to incur that kind of increase year after year after year. When you say that fairness is an important point, you are absolutely right. But the question is, fair for whom?

Mrs Matthews: I guess the ideal situation would be fair for both parties. We came here today certainly with the proposal that there are people in this province who do need assistance and that this assistance should be available to them. What we came to object to was a rent control net that catches everyone, those who can afford to pay, and therefore the disruption in the free market that has also taken place.

Mr Cook: It is also our impression that if there were a full, free market economy --

The Vice-Chair: Thank you. Your time has expired. Thank you very much for your presentation. I know the committee looks forward to your written remarks, which we will read very carefully.

At this time I would like to make some announcements just for the information of the members on the committee. You have before you a yellow calendar which shows this week there is one minor change. The hearings in London will begin at 9 rather than 10. The clerk will be distributing to all members later this afternoon your complete personal itinerary for this week.


The Vice-Chair: The next presenters that we have are the Multiple Dwelling Standards Association, Jan Schwartz, president. Good afternoon. Welcome to the committee. You will have 20 minutes to make your presentation, followed by 20 minutes of conversation with the committee. I am sure they will have some questions for you. Would you begin by introducing yourselves, indicating what position you may have in the organization.

Mr Schwartz: If I may catch my breath, I was running to make it on time.

Mr Chairman, committee members, first I would like to introduce myself and my colleagues. My name is Jan Schwartz. I am the president of the Multiple Dwelling Standards Association, on whose behalf this submission is being made.

In the last 15 years, I represented our association before a number of legislative committees such as this one. In 1986, I served on the Rent Review Advisory Committee -- that is the advisory committee to the Ministry of Housing -- when Bill 51 was being debated.

The attached page with our submission briefly describes the history of our organization and gives kind of a profile. We were incorporated provincially over 20 years ago, in October 1970. We are not developers or builders. Almost all of our members have become landlords by way of purchasing the building rather than having it built.

My three colleagues are sitting next to me. This young fellow is Peter Steffens, from Kitchener, and he had the misfortune of purchasing a building within the last year or so. He will tell you his story himself. This distinguished-looking gentleman, who is a senior citizen, has been in Canada for 22 years, and he is an owner of a 16-year-old apartment complex. It is not an apartment building; they are town houses. His is a remarkable story because it involves the Ministry of Energy. He tried to save energy and he approached his tenants -- of course, the rents in such cases would be reduced if the tenants are paying for their individual meters themselves -- naturally the tenants had nothing against it and would save energy. Each one would look after his own meters, a very good idea.

Mr Li, being the conscious and careful man that he is, approached rent review before he got into the project. He applied for a conditional order. He got a decision that if he spends the money in accordance with the planned presentation, this is what he would receive in terms of an increase. The increase was not really that great, it was about 15% including the guideline statutory, not on top of it.

When Mr Li received the decision -- well, you know the rest of the story. He was caught by the moratorium because although he applied back in April, the last increase took place in February 1990; therefore, he had to wait until February 1991, and that is history. He will give you more details in a few minutes.

The third colleague is John Plohl. He is one of those who does most of the work himself. He is a licensed plumber, he can do electrical work, he can do everything, and he got this bright idea of becoming a landlord. The building was obviously an older building and needed a lot of work, but he thought he could do some of the labour himself. He even moved into the building. He sold his house because he needed the funds to do all the work. Anyway, you can ask him questions later. All three of my colleagues will tell you their stories.

The cases of these three landlords who are here with me will make it quite clear, I am sure, that the claim by the Minister of Housing that only those landlords will be heard who can well afford it is wrong. The truth is quite contrary to this claim. It is the small-scale landlords who own no more than one or two buildings who are going to be the main victims of the retroactive feature of this act. They are the ones who can least afford these devastating effects of Bill 4 if it should be implemented the way it is now.


A number of deputants who appeared before you last week presented you with numerous facts and figures disproving the minister's claim that the proposed amendments are necessary to stop speculators and other unscrupulous owners causing economic eviction to many tenants. Due to the limitation of time, we will try not to be repetitious. We firmly believe that two simple amendments to the current rent review legislation will eliminate the problems of high increases.

Here are the two simple amendments that we would propose: (1) to introduce a cap, a limit of somewhere between 5% and 10% on increases due to necessary capital expenditures which could no longer be ignored; (2) to disqualify second-round purchasers from claiming financial losses until they own the newly acquired property for a minimum of three years. Similar legislation was passed in 1982 in the aftermath of the sale of 11,000 units formerly owned by Cadillac. These two amendments would eliminate both the so-called flips and also so-called, or maybe truly, luxury renovations.

So much for reasonable and effective amendments. Having said the above, I suggest that we should honestly examine and take a closer look at the genesis and aims of Bill 4. Is it really a bill just to introduce some changes to the current rent review system? We do not believe it is. Frankly, it goes much further. To any reasonable and unbiased observer, the conclusion must be clear: Bill 4 in its present form is a deliberate and determined attempt to change the whole structure of ownership of rental housing in Ontario. A tradition which we have known for many, many years is being challenged. Namely, it is the eventual taking over of rental housing away from private hands and placing it into the hands of some non-profit organizations.

No less a person than Premier Rae himself expressed these views in an interview given to the then chairman of the Federation of Metro Tenants' Associations in the fall of 1989, a year before Mr Rae assumed power last September. Rather than quote Mr Rae out of context, we have enclosed the complete text of this interview word for word as it was printed in the Tenants' Bulletin, fall 1989 issue.

We suggest that you read it carefully and draw your own conclusions. Having read it ourselves, we had to conclude that the ideas expressed by Mr Rae in that interview formed the basic blueprint which the current Housing minister, Mr Cooke, is following in his introduction of Bill 4.

This brief is respectfully submitted for your consideration by the Multiple Dwelling Standards Association. I would like Peter Steffens to briefly tell you about his plight.

Mr Steffens: Thank you, Jan. Before I begin, please let me point out that from November 1990 I have been in continual communication with the Ministry of Housing and our local MPP, Mike Cooper of the NDP, neither of whom informed me of these hearings. It is only through an organization such as this that cases like ours may be heard. I will briefly summarize the material in the enclosed letters that have been submitted, letters from my parents, my wife and me.

In the winter of 1989-90 we pooled our financial resources, my parents' retirement funds of $140,000 and savings of my wife and me of $20,000, which was to be used for the eventual down payment for a home since we ourselves presently rent. In April 1990 we took possession of a well-kept apartment with 11 spacious units, backing on to a creek. However, the rents were significantly lower than non-profit housing in the immediate area.

Before and after the transaction, we consulted extensively with the rent review office to follow the existing legislation and abide by it. The rent review office agreed the rents were below market value and assured us, by following the existing legislation, the rents would slowly be increased to a break-even point. We also acted on their recommendation to delay the annual increase from 1 August to 1 November.

Currently, nine out of 11 tenants are voluntarily paying the proposed new increase. The current annual loss far exceeds the salary of either my wife or myself, who both work full-time. Real estate appraisals based on this proposed legislation will wipe out our entire equity of $160,000.

The real questions are: Who will make up the financial shortfall in five or 10 years? Should our wages and my parents' future retirement fund subsidize low-cost rents for others? The fact that this government moves back in time and reverses decisions made eliminates all our faith in our government. This draconian retroactivity, questioned even by legal experts, must be thrown out. The retroactivity and elimination of justified financial losses will bankrupt us. It punishes us for what? For abiding by the law.

If this government wants to introduce legislation that promotes non-profit and subsidized housing, then let the government pay the bill. Average-income families such as ours cannot afford to subsidize housing indefinitely. Premier Bob Rae is on record as stating: "Make it less profitable for people to own it. You say to them, `If you are unhappy, we will buy you out.'" Well, I suggest to this party, put your money where your mouth is. My wife and I will donate our $20,000 down payment for a home to your cause. Attached is an offer valid until 1 May 1991. Legislation such as this makes a mockery of a political party that calls itself democratic, fair and just to all.

Mr Schwartz: Thank you, Peter. Dollar Li will say a few words.

Mr Li: Ladies and gentlemen, my English is not so good. I hope to make it clear.

Number one, we own a town-house complex in Brampton. We have had this for 16 years and the property itself is about 30 years old. In other words, we are not speculators. Most people think that some of the people may be speculators who buy and then sell three years later, but we have held this property for 16 years.

Number two, those renovations are necessary. They are not luxuries. It was necessary that we changed the windows and doors. Lots of tenants in the past few years complained that the window frames deteriorated so the wind blew inside the kitchen or the family room. Even if you put caulking on the side it still does not work, so we decided in this case we better change to new windows and doors, aluminum, and you do not need to paint every two or three years. Those renovations are necessary, not luxuries.


Number three, we do not have any other investment properties. This is the only one, and we make our living on this. We are all retired people; four of us are partners. I myself am 75. So we are all old people and rely on this source of income. During these renovations, we did not have enough money. We all had some money from our own pockets, and some money we had to borrow from the bank, and we pay 14.5% interest on these renovations. So the total amount we spent was $220,000. In this case, if we cannot increase the rent and suffer this, we do not know how to do it.

The main thing is that we applied first to the Ministry of Housing, on 1 April, planning for this conditional order. The Ministry of Housing gave me a conditional order. He said, "If you follow this form, we will increase you 15% including guideline." In other words, 10%. So we obeyed the order. We obeyed the law. We continued to shuffle around with different contractors and completed the job and paid off all the contractors. Now the new government says, "We do not honour this commitment made by a former government." This is unfair to me.

To give a very simple example, I owe Mr Peterson's government some money and now the NDP comes up, so okay, I forget this debt to the government. Can I do that? Similarly, the new government should and must honour the commitment made by a previous government. That is all I want to say.

Mr Schwartz: John, do you want to say a few words?

The Vice-Chair: Just for your information, I would tell you that you have about one minute left.

Mr Plohl: Then I have to say very few things. I own a building at 2336 Weston Road and I recently did some capital expenses, which were waterproofing and renovation of two elevators in the building. That cost me approximately $198,000. I did that last year from February till August. To do these repairs I sold a house which I owned and I moved into the building because I did not have another means to do it.

I am really disappointed that I cannot get back any of the money I put in. If I had this in the bank, I would get some return. I am a full-time plumber. I am working every day. Today I had to stay home because of this hearing. It is not fair, really, because waterproofing was absolutely necessary to stop the deterioration of the foundation of the building and everything else. The elevator was 27 years old, and tenants were complaining. I have a lot of old tenants. Some are even in wheelchairs. I cannot afford to have it like this, somebody stuck in the elevator so many times, so I did this. I did not really plan it; I would rather do something else, like windows or something, but I had to do those two things.

The Vice-Chair: I am afraid I am going to have to stop you, but I am sure the committee will pursue your point as we go through the questioning and give you an opportunity. In terms of rotation, the PC caucus is first.

Mr Tilson: This statement of Mr Rae's was first raised by myself in the House and has been subsequently repeated in the House. There is no question about the quotation you have referred to: "There will be a huge squawk from the speculative community, and you say to them, `If you're unhappy, we'll buy you out'...I also think we need a government program of purchase."

It is quite clear what the government intends to do. It intends to deflate the housing stock and literally buy them out. That has been stated in this article, it has been raised in the House, and I keep waiting: Mr Rae has had an opportunity to deny that statement. I would look forward to someone of authority in this committee who can actually deny that that is Mr Rae's plan.

Mr Turnbull: Mr Schwartz, how many members do you have in your association?

Mr Schwartz: At present, we represent about 52,000 rental units across Ontario. On the average, a member owns about 32 units, roughly, so we have about 1,500 members.

Mr Turnbull: So it would be fair to say that you represent an awful lot of very small landlords.

Mr Schwartz: Yes, it would be correct.

Mr Turnbull: Would you say that the people who are beside you today are representative of the kind of owners you have in your association?

Mr Schwartz: Yes, it is a cross-section of our membership. We believe that it is also a cross-section of landlords in Ontario. Actually, the perception that big developers, builders, own most of the apartment buildings is wrong. The majority, the bulk, is in the hands of small landlords such as the ones you are seeing today.

Mr Turnbull: It seems to me we have heard so many stories about marble lobbies. We all know that marble lobbies have been put in, it is not fictitious, but it has been built up to be something of a major item. Would you say any of the people in your association are putting in marble lobbies?

Mr Schwartz: I do not know of any who have been putting in marble lobbies.

Mr Turnbull: Consistently the stories we have been getting are of people who are upgrading their buildings, putting in new windows, repairing underground parking garages, repairing balconies and putting on new roofs and fixing the plumbing and wiring. Is it a reasonable assumption that your association would also fit that?

Mr Schwartz: Let me give you a little broader answer. Under the previous rent review law -- not Bill 51 but the one before that -- landlords could apply for regular maintenance and repairs at any time. There was no fixed amount for maintenance and repairs, as it is under the current law.

Mr Turnbull: How much is it under the current law?

Mr Schwartz: In the current law it is just a guideline. You cannot apply for repairs and maintenance just for that. There is no provision.

Mr Turnbull: For capital items, within the present guidelines how much is allowed?

Mr Schwartz: When I served on the advisory committee, this issue was discussed. Within the guideline it is assumed that about 1% would be spent on some minor capital expenditures.

Mr Turnbull: Would it be reasonable to suggest that, with 1% of the guideline per year as an increase with respect to major capital items, in the normal course of events you could build a fund to be able to put on new roofs or repair underground parking garages or put on new balconies?

Mr Schwartz: Of course not. You would have to wait 50 years to build it up.


Mr Turnbull: What would be the effect if you did wait 50 years?

Mr Schwartz: The roof would fall in.

Mr Turnbull: We have heard that only 17% of units go to rent review each year for anything beyond the guidelines.

Mr Schwartz: The key words are "in any given year." It is true that in any given year no more than about 17% do go through rent review, but there are many that go one year and then do not go for the next three or four years.

Mr Turnbull: So when they are going they are typically going for a major capital item that needs to be done and cannot be done every 50 years.

Mr Schwartz: Yes.

Mr Turnbull: What will be the effect of retroactivity on your members?

Mr Schwartz: The retroactivity is the worst part of this entire bill. It would be devastating. One of the best examples is my friend Peter sitting next to me.

Mr Steffens: Can I just have one minute to answer the question?

Mr Turnbull: Surely.

Mr Steffens: Just allow me to read a little, referring to a study conducted by Professor Andrew Muller, McMaster University: "By removing the provisions for financial loss, current building values will decline by 25.7%. The province will have wiped out $15 billion in equity." This enormous devaluation is not speculation, but it is real life. Could you imagine the public outcry if a government introduced legislation that devalued their homes by 25% to 35%? The introduction of this legislation will totally wipe out our down payment for a home and the invested retirement funds.

Mr Turnbull: I think you have answered my question. This is exactly what I am getting at. We have had so much testimony. Not surprisingly, we have had testimony from tenants who have said how awful landlords are, that they are not keeping up their buildings and they cannot afford to pay any more rent. We have had testimony from landlords saying that they are going to be wiped out. I would suggest that there may be truth on both sides, but the reality that is implicit in all the arguments the NDP has ever made is that the very low income landlords make on apartment buildings on average is offset by some capital increase. I would ask how you get a capital increase in a building to ever realize a normal profit if you are not allowed to pass through the cost of renovating the building. With buildings, the state of affairs is decelerating quickly. Is that fair to say?

Mr Schwartz: Certainly. It is like a car. It has a certain life span. Beyond this there are major repairs required, and then it reaches the point where maybe it is not worth repairing any more. But of course we have another problem about that.

Mr Winninger: Mr Steffens, I must confess I am finding some difficulty in feeling sympathy for your case, and I will tell you why in basically two points. You attach a letter from one of your tenants indicating that tenant's support of you. However, when you read the letter closely you find two things, that the tenant had a toilet that was not working for six months after you acquired the building, and you were munificent enough to allow that tenant to get her boyfriend to repair the toilet and to pay for the receipt. This was a toilet that had not been working for four years. Second, you allowed the tenant to paint her own apartment -- you never undertook to paint it -- and reimbursed her for her receipts. That is the reason she sent that covering letter to you.

Let me tell you the second reason I have difficulty feeling sympathy for you. You bought a building, you talked down the purchase price to $525,000 in early 1990, you expected that you would bring that rent up to what you call the break-even point -- that is in your statement -- in five years, and you delayed the first rent for three months so you could justify a higher rent in your first year of ownership. How can you honestly expect us to feel sympathetic to you when you were going to raise these tenants' rents year after year by more than the statutory guideline to bring the rent up to what you felt was a break-even point?

Mr Steffens: I suggest you mention the rest of the letter, too. That $200 for the paint alone was paid out of our wages. The Minister of Housing and the Premier continually harp about rent increases above the guidelines for luxury renovations or financial loss from the flipping of properties. This is just to bring us up to a break-even point.

Mike Cooper also suggested that maybe we overpaid for this property or bought it at the wrong time. We have had some real estate appraisals done on this property, based on the existing rental income, which, I point out, is lower than the non-profit housing down the road run by the university, significantly lower. These appraisals come in at $320,000 to $350,000, values equivalent to single detached homes on the same street, or a value equivalent to the land alone it stands on. Is this government proposing to introduce legislation where land will be worth more than the building itself, operating at a loss? Do we want to create a Bronx in Ontario, where buildings are going to be burned and abandoned?

Mr Winninger: Just to conclude, I put it to you that you purchased that building on speculation so you could sell it five years hence for a lot more money than you paid for it, and all of that reward was on the backs of your tenants. I will defer to the other members.

Mr Steffens: Would I be able to comment on that, please?

The Vice-Chair: Certainly.

Mr Steffens: If we were just in this for speculation, as all these members continually harp on, and the Minister of Housing, David Cooke, and Bob Rae also, we would have sold this property one week later. We were approached by our real estate agent with an offer from Toronto investors for $25,000 more than our purchase price. That was in a slow market. The reason we came across this property that was so well-kept was that it was not on the multiple listing service. They offered us $25,000 more, were not interested in the vendor-take-back mortgage -- 10% only, 4.25% below the existing mortgage rates which we received. If you know how to work a calculator, or the Minister of Housing, then I suggest you try to calculate the return on that, more than doubling our money in one week without taking possession. That is speculation. We were interested in a long-term investment, and this was to be a secure long-term investment for my parents' retirement.

Mr Cooper: This is the thing I would like to address. On page 3: "This was to be a secure long-term investment for my parents' retirement." The truth is that about 1% of landlords fail, whereas in the regular investment world it is about 50% failure for brand new businesses. With any investment you have to take certain financial risks. What you were looking at was playing with the system and using the present system to build up and you would have, as you are saying, a secure investment. If you take any risk at all should it be the government's position to bail you out? It does not bail out other industries.

Mr Steffens: I am not asking for the government to bail us out, but if it wants to introduce legislation that promotes, as I said, non-profit or subsidized housing, let it foot the bill, not average-income families.

Furthermore, I will quote from my father's letter: "For more than 34 years as an Ontario resident, coming from a European background, my wife and I always considered real estate to be a safe and secure investment. While we were willing to accept a lower return on our investment than we would have received if we invested in other money markets, we felt that the real estate would give us a greater long-time security." The failure rate is a lot lower because the risk is lower. Why is the risk lower? Because the return is lower. Risk and return are co-related.

Mr Cooper: But basically what you have come into is bad timing, like I explained to you, because I have been following this case. You were planning on playing a system that was in place.

Mr Steffens: No, we were abiding by the law and we are being punished by it.

Mr Cooper: You were playing by a rent review system.

Mr Steffens: Abiding by the law -- legislation which, I may remind you, the NDP also supported when the Liberals brought it in.

Mr Cooper: We did not support the Liberal legislation.

Mr Steffens: That is what I have been told.

Mr Schwartz: You voted for it.

Mr Winninger: The Conservatives and the Liberals voted together.

Mr Tilson: Of course.

The Vice-Chair: One conversation at a time, please.


Ms M. Ward: I would like to correct that. That was stated, not stated out loud but stated in the newsletter which was attached to a submission last Thursday. It did not really say we voted for it but it insinuated it, and the actual fact was that the NDP and two members of the Conservative Party voted against Bill 51 in 1986.

Having made that statement, I want to make another statement and then ask a quick question.

I was surprised, when you started with your presentation, to find that you were a group of landlords, because your name, the Multiple Dwelling Standards Association, suggested to me some type of self-governing body which maintains standards for landlords, which would be a nice thing to see. But that is not your function, is it?

The Vice-Chair: Question?

Ms M. Ward: That is my question. You are a collection of landlords, not with any governing body and any control over your members.

Mr Schwartz: We are duly incorporated under the provincial law and have been since October 1970. This is our 21st year. You have never heard of us because I guess you were not interested or you were not involved.

Ms M. Ward: No, what I am saying is, that is not your --

The Vice-Chair: We will now move on to the Liberal caucus.

Mr Mahoney: You're like a union.

The Vice-Chair: Ms Poole has a question.

Ms Poole: It appears that the NDP members believe there should be risk attached in following the law of the land, and I personally have a great deal of difficulty in following their logic on this point since the decrease in equity that this gentleman is talking about came about not because of speculative risks but because the bill which you have proposed is actually going to decrease his equity by some 30%. To me, there should be no risk involved in following the laws as set out in the Legislature.

Now that I have had my little moral preaching for the day, I actually have a question for you.

Mr Drainville: Don't stop now.

Ms Poole: You have mentioned that you are in a precarious financial position because of the proposed Bill 4, that you would have a financial loss of something like $35,000 per year and that the salaries of you and your wife accumulated come to just over that amount.

Mr Steffens: Yes, that is correct.

Ms Poole: I am curious what you will do when you have ongoing maintenance and major repairs that are above and beyond what you collect in the rents. Are you going to be able to do that maintenance? Would you put in the same degree and the same level of care if you were experiencing severe financial loss than if you were not?

Mr Steffens: No, and this is why I go back to David's question also. The letter was attached to illustrate that right now any maintenance funds are coming from our own wages. We viewed this as a long-term investment so we did not mind pumping our own money into it. However, if the introduction of this legislation, as it is proposed, is going to totally wipe out our down payment, all our invested funds, there is no incentive to maintain the property any more. With no remaining equity, why should we continue to pump our own wages into this property?

Now, you may suggest that if we do not maintain the property to local bylaw standards we will be forced to by municipal governments. If, however, the money does not exist, or if one of us is laid off, will the government garnish our wages next? I understand there are proper procedures for this, but if this legislation is passed we will send a letter to our tenants explaining the situation and stating that some services will be eliminated, for example possibly garbage collection, snow plowing services, water softener salt, janitorial services and no maintenance. As a result, the rents may qualify for a reduction, but let the tenants wait now for the application to be processed. Let the tenants deal with the expenses rising by 10% to 50%.

For example, governments raised our municipal taxes by 10.65% last year, landfill taxes by 55%, but if these increases do not fit the formula or if they are deemed insignificant, they are lost in a bureaucratic void. It is evident from this legislation that tenants, neighbours and landlords will all suffer.

Ms Poole: One of my fears with this legislation is that it would encourage landlords not to put the money into maintenance, the money that they normally might put in, and I think that is a very important point.

The Minister of Housing has made it clear -- I do not think he meant to make it clear, but his own statements have made it clear -- that this is an abuse by a few landlords, and it appears to be quite a draconian solution to solve the abuse of a few landlords.

I have proposed in the House that there are a number of things we could do which would have the same effect of protecting tenants and yet not be as unfair as the proposed Bill 4: that there be a cap on rent increases, that only necessary repairs be allowed to go through and a provision that would ensure that day-to-day maintenance is carried out by the landlord and that in order to get the statutory increase the landlord would need a building certificate which would certify that the building was in a good state of repair.

It is an all-inclusive package. I know some landlords would like to say, "We'll take the first two but not the third," and tenants might like to say, "We'll take the third but not the first two." Could you live with this kind of package as interim legislation for Bill 4? Any of you may answer that.

Mr Steffens: The point I was trying to make is, at this point we still continue to pump our own wages in to maintain this property and we are still trying to improve it. This was to be a long-term investment, 10 to 15 years, so we wanted to maintain it. But there has to be an incentive to maintain the property. If the property is only worth the land alone it stands on, why maintain it?

Mr Schwartz: If I may make a remark about your proposal, this last part about some kind of certificate, I can see where it comes from. Your intentions are good, obviously. I am just a little concerned whether this would not be something extra along the bureaucratic way. If it could be something rather simple, perhaps it would work, but that is the only concern I have about it, a new bureaucracy on top of what we have. We have inspectors at the municipal level and we have the standards board.

Ms Poole: I am actually talking about the municipal inspectors.

The Vice-Chair: Ms Poole, perhaps you would allow Mr Mahoney the final minute.

Mr Mahoney: I want to thank you for coming, particularly because I think you put a face on the problem in the province, and that is that not all landlords are necessarily the Greenwins and Cadillac Fairviews of this world, nor are they, as Mr Rae refers to them, the 12345 Ontario Ltds, but in fact are real people who, from what you have heard, I think you can see you have to have a lot of nerve to invest in Ontario and particularly in your area these days.

I would also suggest, and I would perhaps like your comments, I do not think Mr Rae wants to buy your buildings at all. I think he wants you to quit claim them after he simply makes the value deteriorate to the point that you can no longer afford to carry them on. I think what you are looking at is a government that is bent on simply taking over the private sector interests in the rental housing market altogether and it does not much care whether your mother and father's retirement is secure or whether you lose $165,000 or what the outcome is. They simply want to further their socialist agenda. I wonder if you had any thoughts on that.

Mr Dadamo: All of a sudden, your government has a conscience.

Mr Schwartz: I did not detect a question there.

Mr Mahoney: My question was if you had any comments on that or if you felt that perhaps that agenda is indeed reality.

Mr Schwartz: Yes. The reality is this: We have a new government in Ontario with a new philosophy. We do understand that. The philosophy is quite different from the two previous governments. It is the first time that we have had an NDP government in Ontario and we have to live with it, at least for the next four or four and a half years. We realize that.

But did Mr Rae and Mr Cooke and company realize what this retroactive feature means to the people of Ontario who happen to be landlords, the idea that, "Oh, those are landlords who can well afford to take these knocks"? What we tried to show you this afternoon is that it is not true, that those who are in the trenches, in the first line of fire, are little guys with one building, people from different walks of life who have other incomes. Some of them work in offices, some of them work in factories, some of them are senior people. His parents put their RRSP in it. And the retroactive aspect of it is cruel, it is punitive. That part we cannot live with.

The Vice-Chair: Thank you very much for your presentation. I am sure the members found it quite interesting and informative. Thank you for coming today, gentlemen.


Mr Mahoney: On a point of order, Mr Chair: I am a little disappointed with the division of time for questions from each caucus to this group. I think they are a very important group and I know that my colleague Mrs O'Neill had questions and I had a number of questions that I wanted to ask with regard to their brief directly. Frankly, I think we as a caucus were short-changed on that particular delegation.

The Vice-Chair: I can assure you, Mr Mahoney, that you had seven minutes, as did the other two caucuses exactly. I would tell your caucus that if you wish to divide your time up slightly more evenly, then you might all have an opportunity of getting your questions in. But I am scrupulously fair about the amount of time each caucus gets.

Mrs Y. O'Neill: We have had that statement in the last paragraph of this brief and we have had it presented many times to us about the misinformation that seems to be there about landlords who are large and landlords who are small. I wonder if the research staff could get for us that information, how many landlords there are in the province who own more than 100 units. I think that is some kind of cutoff point.

Another cutoff point is low-rise, which is the five-storey and usually involves about 22 or 25 units. I wonder if we could have that kind of data presented to this committee so that we would know how many landlords are what are considered people who gain their income from the ownership of property and those who are in the larger business, so to speak. It is hard for me to explain exactly the differentiation, but maybe the researchers can help us with some information that is accurate about the ownership of property in this province.

The Vice-Chair: I am sure that the researcher will do everything that can be done to come up with that information.


The Vice-Chair: The next presenters will be Dr Jack Tse and Wilfred Lau of Fairwin Investments Ltd. Welcome to the committee, gentlemen. I would like you to introduce yourselves and the position in the group or organization that you represent. You have 10 minutes to make your presentation; 10 minutes will be equally divided among all three caucuses for questions following your presentation. Welcome to the committee.

Dr Tse: My name is Dr Jack Tse. I am the president of Fairwin Investments Ltd.

Mr Lau: My name is Wilfred Lau. I am the vice-president of Fairwin Investments Ltd.

Mr Chairman, members of the committee, I would, because I am not very eloquent, have to read from the prepared text. I hope you do not mind. After that, Dr Jack Tse will answer any questions that you may have.

Over the past eight years, Dr Jack Tse and his associates, many of them foreign investors, have invested over $300 million in real estate in Ontario. About half of these investments are in apartment buildings and the rest are in major hotel properties. As a result of this investment, we directly and indirectly employ approximately 700 people in Ontario. Our initial investment objective was to acquire prime but reliable real estate holdings in Ontario on a long-term basis.

As foreign investors, we have always understood that investing in Ontario provides a lower return than in other parts of the world. At the same time, however, it has always been understood by us, at least up to 6 September, that there was value to having investments in a jurisdiction which was stable politically, which had a fair market system from a government-regulated point of view and where the future was, it was believed by us, predictable.

When we began to invest in rental properties in Ontario, we had to structure our financial strategies according to the rent review system that was in effect, whether we liked it or not. Traditionally, in a democratic society, if we follow the rules and regulations laid down by the government, we would be grandfathered from any further future changes. Therefore, we believed that once a rent review order was awarded, the phase-in provision of that order would not be taken away by any subsequent government. In short, we believe in the fairness of the democratic system. Now with this Bill 4, fairness and democracy have been taken away from this province.

On the surface, Bill 4 only dates back to 1 October 1990, but actually it is retroactive to 1986, when the Residential Rent Regulation Act came into effect. By declaring phase-in orders null and void, Bill 4 affects rent review orders that were issued four years ago. Bill 4 actually takes away from landlords the right to collect legal rent that was granted previously by lawful rent review orders. Is it not ironic that on one hand the government always insists that only legal rent can be charged, but on the other hand, it takes away from landlords the right to collect legal rent granted to them by the previous government? This is like teaching us not to trust the government any more.

Foreign investors have a lot of alternatives. They need not choose to invest in Ontario. Investors only invest when they have confidence in the future of Ontario. By introducing legislation with retroactive effect, we see that confidence being wiped out completely. When offshore funds stop investing in real estate in Ontario, so will they stop investing in government bonds, treasury bills, other businesses and industries.

Local landlords have been quoted in various newspaper articles saying that they do not like the policy of the present government and will move out of the province. When local business people do not even want to stay, how could you expect foreign investors to show any interest in investing in Ontario?

The other detrimental effect of the retroactivity of Bill 4 is that rental property will have difficulty in obtaining refinancing when mortgages come up for renewal. When lawful rent granted a few years ago by a phase-in order is no longer honoured by this government, a lot of buildings simply will not have the cash flow to service the debt in refinancing.

Apart from debt serviceability, cancellation of phase-in orders also causes a substantial drop in the values of the buildings. When values of buildings diminish, equities will be wiped out completely. In order to qualify for conventional mortgages in refinancing, landlords will probably have to inject more money into their respective buildings to build up their equities again. Under normal circumstances, such as when the economy is bad or when the business is not doing well itself, most investors would be willing to pump more money into their business, even if they are not expected to. But investors will not invest any further money into Ontario just because legislation is changed retroactively by the change in the ruling party. Furthermore, investors have lost their confidence in the government and will not inject extra funds into a system that is being used as a political tool.

When landlords fail to inject more equities into a building or when cash flow can no longer sustain the refinancing, the property will then have to slide into receivership. Financial institutions are already hard pressed by loans to other real estate sectors. Any further losses in loans to rental properties suffered by this financial situation will trigger a made-in-Ontario savings and loan crisis. The snowball effect on any failure in financial institutions on our already weak economy is unthinkable.

When investors' financial strategies are upset by arbitrary change in regulation, it is natural for them to look into other alternatives to recover their losses, for instance claiming compensation from the government through the judicial system. With the introduction of Bill 4, the government is indeed sending a very bad signal to the business community, both in this province and in other parts of the world.


After talking about the detrimental effect of Bill 4, I would like to make a few suggestions.

To regain the confidence of the international investment community, the retroactivity provision of Bill 4 has to be abolished, and to demonstrate Ontario still respects fairness, all phase-in orders that were granted by the previous government must be honoured.

This government has made a very big issue out of excessive rent increases. However, if David Cooke and the Premier would release the true figures issued by the Ministry of Housing and not just keep emphasizing extreme cases, the public would realize that less than 0.5% of all the rental units in Ontario have rent increases over 30% in a 22-month period from 1 January 1989 to 31 October 1990.

With such few exceptional cases, it does not make any sense to punish and harness all landlords in the province with non-refinancing and suffering property value loss. If the government still chooses to ignore the true statistic, not only will landlords and investors suffer, but so will the people of Ontario. It seems like what Bill 4 has proposed is no different than what a government of a Third World country would propose.

If the government is so obsessed with high rent increases, maybe the answer is simply to put a ceiling of, say, 12 per cent on all rent review applications that apply on the basis of renovation or financial loss. This would then solve all of Mr Cooke's so-called problems of luxury renovation and flipping of buildings.

In conclusion, I think the government would be very naive to think that foreign and local investors will just accept the punishment that Bill 4 imposes on them. Nor will the investors come up with the extra millions of dollars, as shown in my example in appendix A, just to support legislation that is caused by less than 0.5% of all the rental units in the province. Actually what the government tries to achieve, which is to avoid exceptional high rent increases, can be achieved very easily by other means, such as discussed earlier, unless of course Bill 4 is designed simply to buy votes.

Finally, I would like to stress that the free market system has been proven to be a most effective economic structure. Any deliberate intervention by the government will tilt the scale to one side such that the present private ownership system in the rental housing industry will be destroyed. We, as a landlord, would actually like to enjoy a harmonious relationship with tenants and operate our buildings as a normal business. We sincerely hope that this government will not take our rights away from us and undermine the democratic nature of our society.

Mr Winninger: I suggest to you that it is precisely this kind of investment and speculation that has driven commercial residential property prices up in recent years. If right now you are looking at a decline in your investment value, it is not just because of the recession. It is not just because of high interest rates for purchasers of your properties. It is also because your property values have been driven by excessive rent increases which you have gone back for year after year, and now the bubble has finally burst and you are crying foul.

Dr Tse: What is your question?

Mr Winninger: The question to you is, how can you blame the NDP's policies for the diminished value of your building when it was probably overvalued due to high, excessive annual rent increases up to this date?

Dr Tse: I am not blaming the NDP. I am blaming myself to make such a mistake as to invest here. I did not expect a reasonable government would do such a thing as the retroactivity. All I can blame is myself at this point, but if Bill 4 is not going to be amended, then we have to cover our own losses through other means, which I do not have to specify in here.

Do you have any other questions?

Mr Winninger: I will defer to my colleagues.

Ms M. Ward: Are you simply purchasing existing buildings or do you invest in any new buildings? Do you participate at all in the production of new rental stock?

Dr Tse: We are buying existing buildings because we just want to tuck our money away in a safe environment such as Ontario. Furthermore, we have never sold any of our buildings. Every one of them is bought for long-term purposes. In fact, when some of those people were saying about flipping and all this --

Ms M. Ward: I did not understand what you said there; sorry.

Dr Tse: In fact, when the newspapers said the rent review order is being used so people are flipping and making money, you are right. The Canadians are making money off the foreign investors.

Ms M. Ward: Could you explain that to me.

Dr Tse: We come in and we look at the rules and we look at the price. We buy the buildings and then the rules are changed. So who got ripped off? You do not understand?

Ms M. Ward: No, I thought you meant Canadian investors were making money off foreign investors.

Dr Tse: No, we bought the buildings from Canadians. They made money already. We did not make money.

Ms M. Ward: Yes. Everyone along the way has made their money and taken a piece.

Dr Tse: We have not made any money. We have been putting money in the buildings.

Ms M. Ward: That is more or less like pyramid schemes. Someone eventually gets stuck.

Dr Tse: Right.

Ms M. Ward: You are familiar with pyramid schemes. Are you still a member of the AFFORD group?

Dr Tse: Yes.

Ms M. Ward: You are here making an individual presentation, but in December they circulated a document and I saw your name in it, the name of your organization, at the time.

Dr Tse: Right; I am.

Ms Poole: Thank you for your presentation today. We appreciate the fact you took the time to come. I would like to refer to the letter from you, Mr Tse, to Bob Rae, dated 27 November, which is in your brief as an appendix. You stated that until 6 September 1990 your investment plan was to acquire a further $500 million of similar investments in the province over the next five years. Are we to take it from your comments that you have completely abandoned those plans?

Dr Tse: At present we are not going to invest any more money until we see what is going to happen to Bill 4, because our investors have lost their confidence in this province completely at this point.

Ms Poole: I gather from the comment you made right now that you are not only not planning to invest in the rental real estate market, but that you have abandoned any plans that you had to invest in Ontario, period, in any sector.

Dr Tse: That is correct. In fact, a lot of our investments are in the hotel sector. That is where most of our employment contributions are coming in. More than 90% of the employment figures we give you are through the hotel sector.

Ms Poole: I am sorry to hear that and I hope this bill can be amended to restore the confidence that you and other investors should have in this province.

Dr Tse: I hope so, too.

Mr Mahoney: Gentlemen, you refer on page 4 to concerns about investors who lost their confidence in the government and will not inject extra funds into a system that is being used as a political tool. That is number one, and the second part of the question is, you refer on the next page, page 5, to the possibility of claiming for compensation from the government through the judicial system. My question is, could you expand on what you mean by your statement that it is being used as a political tool, and second, have you received legal advice that there perhaps is some challenge that you are considering launching in the courts against this government?

Dr Tse: We are proceeding to get some legal advice at present. The decision whether we will sue or not is not going to be made by me. It will be made by my foreign investors and their thinking is probably quite simple compared to ours. As far as they are concerned they come in here, play a chance game, play according to the rules. After they lay their money on the table, the rules change and the money has disappeared.

Mr Mahoney: On the first part, about the political tool, who do you think is playing political games and for what benefit?

Dr Tse: On the same day that Bill 4 was announced, on the same page in the Toronto Star, on one side they set the limit to 5.4%; on the other side they set, I think, welfare, the shelter allowance increased by 10%. Maybe I am stupid, but I just do not understand that. How on the one hand could you guys only get 5.4%, and on the other hand you guys are going to get paid 10% to pay for your shelter allowance? Does that mean they will be left with some pocket change? The only conclusion I could draw is that it is a political tool.


Mr Tilson: Do you have any comments as to whether or not there has been loss of jobs or loss or withdrawal of contracts as a result of the proposed implementation of Bill 4?

Dr Tse: A lot of my friends have told me that they have cancelled all their renovation programs. We originally had some renovation programs which we are not even going to put into any rent review application because we are just living on the phase-in orders. We were to cancel all of them. There is not going to be any more money put in to renovate if I am not going to get paid for it.

Mr Turnbull: Dr Tse, we heard from your colleague, Mr Lau, before on the question of foreign investment, and he mentioned at the time that foreign investors were prepared to invest in Ontario in residential housing with a lower rate of return. Could you just expand on that a little bit.

Dr Tse: As far as foreign investment is concerned, because Canada is always considered to be a very safe place to put their money, they usually are willing to accept a lower than normal return in Hong Kong or other places in the world. It is as simple as that. But I think that advantage is gone with one stroke from Bill 4.

Mr Turnbull: Dr Tse, once it is gone, even if the NDP were to reverse its position with respect to the permanent legislation, do you think it is conceivable the confidence would return to this government, to this province?

Dr Tse: It would take a long time. It would take a lot of babysitting to bring them back to the table.

Mr Turnbull: I think it is fair to say that this province has relied quite heavily on foreign investment for most of this century.

Dr Tse: That is true.

Mr Turnbull: Do you think that is going to have the kind of effect that we will have to live with for a long, long time?

Dr Tse: I think so.

Mr Turnbull: We have heard in suggestions by the NDP that capital appreciation is the offset to the very low actual cash flow returns. Am I correct in thinking that it is absolutely impossible to have capital appreciation unless you have some mechanism for passing through increases in the rent?

Dr Tse: I think what you said is true. Just look at New York as an example. There is your fact. Nobody wants those buildings any more in New York.

Mr Turnbull: So it is a complete myth, the suggestion that it will be offset by capital appreciation unless that mechanism is in place.

Dr Tse: That is right.

Mr Turnbull: Then we would be faced with no capital appreciation and we would also be faced with deteriorating buildings, because there was no money to flow through. We know that the housing stock is aging, and on the other hand we would have very low rates of return, which would be unattractive both to Canadians and to foreign investors.

Dr Tse: That is correct.

Mr Turnbull: Can you tell me also, just a point on property taxes, do you know what your property taxes are on a per unit or on a percentage basis?

Mr Lau: I do not have that on a percentage basis. I have some figures here.

Mr Turnbull: Am I correct in thinking that property taxes have been increasing by a greater amount than the rent guidelines each year?

Dr Tse: That is for sure.

Mr Lau: Oh, yes. That is for sure. That is much more than the guideline. I think on the average property tax -- it depends on which municipality it has been -- a minimum of 8% a year increase, in some instances close to 12% or 15%.

Mr Turnbull: That has been consistent?

The Vice-Chair: Thank you, Mr Turnbull. Thank you, gentlemen, for coming and presenting your views to the committee today.

Mrs Y. O'Neill: Mr Chairman, I do not know if this is a point of order or what, but there is a terrible whistling in this room and we have a lot of hard work to do. Is there anybody who can come in and check what is causing it?

The Vice-Chair: Apparently, the clerk informs me, it is the air-conditioner and they have been checking on that and will be working very hard to correct that for you, Mrs O'Neill.

Mrs Y. O'Neill: It is not just for me. I just find it is quite annoying and I am sure I am not the only person.


The Vice-Chair: Good afternoon, gentlemen. I take it that you are from the St Andrews Towers Tenants Association. Would you be so kind as to introduce yourselves and your positions within that association. You have 10 minutes to make your presentation, followed by 10 minutes of questions from the committee.

Mr Gosschalk: My name is Bob Gosschalk. I am president of the St Andrews Towers Tenants Association, which was founded in 1983, a non-profit Ontario corporation which received its letters patent on 15 June 1988. With me this afternoon I wish to introduce you to Jack Squier, secretary of the executive board of our association. We wish to thank you for inviting us to give you our views and, hopefully, constructive suggestions for your deliberation and consideration.

St Andrews Towers Tenants Association, which has over 800 paid-up members and is possibly one of the largest registered independent tenants' associations in the city of North York, has on many occasions voiced its grave concern about the rent review legislation and the current Residential Rent Regulation Act, as amended many times, as well as Bill 4, which is now being reviewed and discussed before this committee.

Before we give you our presentation on how many of the current difficulties and differences between tenants and landlords can be solved, we would like to go on the record that we oppose the retroactive element of Bill 4 on the same basis as we oppose the retroactive element of decisions by the rent review tribunals that allow landlords to collect increased rents on a retroactive basis also.

As you have heard, the main cause of this has occurred because of the tremendous workload at the rent review boards. As much as the landlords are against the retroactive character of Bill 4, tenants are also against having to pay hundreds, if not thousands, of dollars in retroactive rents, which has created panic and financial hardship for thousands of Ontario citizens.

As many representatives of individual tenants' associations already have provided you with many examples of property mismanagement, lack of communication, poor business practices, financial incompetence, gross neglect and sheer greediness by landlords, large and small, our association wishes to draw your attention to a very important matter that has hardly been discussed by either tenants or landlords at this hearing.

In 1980, the provincial Assessment Act was amended to permit owner-occupied condo apartments to be taxed at the same rate as single-family housing. Subsection 65(2) of the act directs the assessment departments to assess apartment condominiums or co-op units at the same proportion of market value as single-family dwellings in the vicinity. I hope you can follow me here. This ratio is generally about one quarter to one third of the ratio for rental apartment buildings, although the difference varies with location. The Assessment Act does not allow the difference in taxation if the condo unit is occupied by a tenant.

The case of a small rental apartment building illustrates the effect of condominiums or co-ownership conversions on the tenants' property tax structure. In 1980 Toronto city council refused to consent to approval of a condominium conversion plan of the building at 609 Avenue Road. However, the owner succeeded in evicting the tenants, sold shares in the building together with occupancy rights and claimed the reduced property tax rate. In this case, although conversion and renovations increased the market value of the apartments, the lower tax rate reduced the assessment from $244,900 to $125,000, a 44% reduction. The reduction in assessment for owner-occupied apartment units ranges between 40% to 46%.

If, as suggested by some here the other day, tenants should be allowed to purchase their apartments, the property tax losses to a municipality and thus the taxpayers would be extremely high because of the total lack of equal taxation.


If present market value assessment proposals are approved by this government, our tenant members, through their rent payments, will be paying real estate taxes at a rate maybe four times that of a house or condominium apartment. This is the highest rate in Metro Toronto, one third higher than commercial properties and slightly higher than industrial properties.

At this rate of growth, tenants' real estate taxes could easily be five times higher than those of home owners by 1996, or equal to about five months' rent per year from about two months' rent in 1960. The cause of this unfair tax burden to the tenants is the insistence by this Ontario government and the previous Ontario governments, including Liberals and Conservatives, to retain an unfair assessment classification that prevents the equalization between apartment units, condo units and single-family dwellings.

What makes all this even more offensive is that tenants receive fewer public services than home owners and on average they have far fewer schoolchildren per household to educate. A perfect example is the very high percentage of senior citizens and working couples without children who live in rental apartments, and as far as ability to pay, our research tells us that on average the disposable income of home owners in the city of North York is about four times that of tenants. We do not need the lipservice from Metro and provincial politicians that under the new tax scheme tenants would be protected from tax increases for a few years. This is utter nonsense and I am sure none of the committee members would believe such statements.

I bring to your attention a copy of an interim report of the subcommittee on property taxes for rental apartment buildings. This report was prepared by the city of Toronto assessment reform working group, which was published on 20 December 1990. We have attached this to our brief for your study and consideration. It is an absolute eye-opener.

Our submission to you today is that without the complete co-operation of the Ministry of Revenue -- we are not talking about Housing -- and all political parties involved at Queen's Park, NDP, Liberal and Conservative -- and let's forget the politicking here -- in changing the Assessment Act, whereby property assessments and taxes should be equalized, the terrible problem of continuous high rents for tenants and low investment returns for landlords will be the politicians' ongoing nightmare. You will be coming back here again, incidentally, for another hearing five years from now going through the same darned thing again, so your nightmare continues. I mean that, your nightmare will continue because the problems will not go away.

In a letter we received from the Minister of Revenue, the Honourable Shelley Wark-Martyn says, "The situation you describe in your letter, where one class of property is assessed at a relatively higher level of value than another class, is not the result of any policy, but merely reflects historical trends in local property values." We can go back to 1867, the year that this country was born.

We received a similar answer from the Treasurer of Ontario, who said, "With regard to property taxation, property taxes on individual rental apartments are higher than condo apartments of comparable size and value. This results from historical" -- again a different minister quotes the same thing -- "assessment methods used by municipalities before the province assumed responsibility for property assessment in 1970."

This kind of feeble response from a government which says that it cares about its average citizens and allows this terrible act of tax discrimination to continue is the main reason you are here today searching for a solution to our rental housing crisis.

There is no doubt in our mind that the present rent review and rent control laws and regulations need to be drastically overhauled and changed.

In my briefcase -- in fact I have it right here -- I have three work orders, and the clerk has copies of them if you wish to get them from her. I have three work orders covering three out of seven buildings, regarding 116 violations by our landlord for maintenance and repairs which have been reported by the city of North York bylaw enforcement department. None of these infractions will cost much money to rectify. In the seven years that I have been president of the St Andrews Towers Tenants Association it has been the only way to get an otherwise very humane landlord to keep up his end of the bargain.

We have one building against which a rent penalty is imposed by the Ministry of Housing for non-compliance because of shoddy conditions. In this case, the landlord loses a 5.4% increase for 1991 until he has complied with the work orders. The idea of equalizing property taxes should be more than acceptable to most professional landlords. It would supply them with about 60% more net revenues and give them an opportunity to establish a contingency fund held in trust to pay for capital expenditures, and at the same time eliminate unnecessary rent increases for the tenants. The new rent legislation must set rules and regulations as to how the extra funds to cover capital expenditures should be used and the recognition that tenants, through their tenants' associations, should be consulted in the disbursement of these funds.

There are, I am sure, many other areas we could cover. But the fact that you have given us this opportunity to make our submissions on tenants' property taxes and their relationship to the rental housing crisis is indeed very much appreciated. On behalf of all our members I wish you much success and we trust that you will do the very best to alleviate the plight of the tens of thousands of tenant taxpayers in Ontario. Thank you very much.

The Vice-Chair: Thank you. Your comments have evoked some interest. Ms Poole has some questions.

Ms Poole: Thank you for coming with your presentation today. I just might offer a comment on your comments in your brief about the rate of property taxation paid by apartment buildings being considerably higher than what is paid by single-family dwellings. This has historically been the case and it has been of concern to a number of major tenant activists only in the past few years when it has become evident, and the city of Toronto, I believe, is taking a very active stand on this.

Mr Gosschalk: You have the report.

Ms Poole: Yes, I have seen the recommendations of the Toronto assessment reform working group, but I understand that Councillor Layton has actually written to both the Minister of Revenue and the Minister of Housing, recommending that this be dealt with. I suspect, too, it would give you a very good brief, if you would like to appear before the taxation commission, I will not call it the fair taxation commission because that remains to be seen, but at any rate, when they do --

Mr Gosschalk: What was that last one? I did not get that. You mean to say I will not get a chance?

Ms Poole: No, I am saying that you may also have a second chance to make your presentation before the taxation commission.

Mr Gosschalk: I would love to.

Ms Poole: I would recommend that you do so. With regard specifically to Bill 4, you made the very interesting comment on the front page that you would like to go on the record that you are opposed to the retroactive provisions in Bill 4, the same as you are opposed to the retroactivity that was imposed on tenants because of the backlog.

Mr Gosschalk: Right, it takes two to tango.

Ms Poole: Yes. Now what I am trying to figure out is, are you saying that two wrongs make a right? Are you saying that you think the retroactivity clause should be removed from Bill 4, or are you saying tenants had to put up with it in the past, therefore landlords should be penalized now?

Mr Gosschalk: The sins of the past were really under the Conservative and the Liberal governments, of which you were part of at the last, when they were in power. The retroactivity of rents, when the Liberal government burned the rent review tribunal to the point where there were tens of thousands of cases of backlog, I cannot blame the NDP for it. It was the Liberals who did that.

What I am saying is this. I find it very iffy when politicians today are accusing each other about this retroactive situation. I agree, there should not be any retroactivity, but at the same time you cannot speak from both corners of your mouth. If you say you are against retroactivity, you never mentioned this, and I have watched you on television. You have never mentioned this same thing when it came to tens of thousands of tenants who have had to come up with $2,000, $3,000, $4,000, $5,000 of rent because the Liberal government at the time did not see fit to put more people out to work to catch up on the backlog. A lot of the trouble today is because your government, the Liberal government, was the cause of the situation we have today.


Ms Poole: I would just like to point one thing out to you just to correct something you said. You said the retroactivity caused to tenants was not caused by the NDP. An item in the accord was that pre-1976 buildings were to be brought into rent review plus $750 per month --

Mr Gosschalk: You can play any political way as much as you can, but the point is we are talking about dollars and cents.

Ms Poole: I am not playing politics. I am saying that is something agreed upon by the parties.

Mr Gosschalk: We are talking dollars and cents, and the point is this: If you want to favour the landlords you have to also favour the tenants, and you are not doing it.

The Vice-Chair: It is time to move on.

Mr Turnbull: You raise a very important point in this whole question of property taxes. You have actually raised an interesting aspect in the sense that if that inequity were corrected, those moneys, rather than flowing back to the tenants, would in fact be available to the landlord for capital repairs. I think that is quite a constructive suggestion and I would hope the NDP is listening to this. Are you aware of the fact that in the last election, many of the NDP aspirants and many of them who were actually elected in Metro Toronto -- because this essentially is a Metro Toronto issue -- fought on the issue that they were against market value reassessment?

Mr Gosschalk: With all due respect, I know your stand on market value reassessment and I sympathize with you. The point is, the politicians have been playing around with that market value reassessment at the Metro level for so long that the Liberal government at the time did not want to touch it, because there was so much against it. Whether a party is for or against a situation like that, it is a matter of doing your homework. I do not think at the time that tenants' associations or large ones like mine -- and I am the largest one, possibly, in North York -- I have never been consulted on any of those matters, and we are taxpayers by far more millions of dollars than home owners.

Mr Turnbull: It is a fact that market value reassessment would have the effect of increasing taxes on many of the apartment buildings that were built prior to 1970, increasing their taxes by very, very large increases. Those tenants who had already had large rent increases would further be impacted by large increases in taxes due to the fact that the market value of their building had gone up.

Mr Gosschalk: Yes, but coming back to the point, the landlords have come in here -- and I sympathize with them. I heard this case here of the gentleman from Kitchener. I sympathize with this gentleman. But the point is, you are not giving either us as tenants or the landlords a break. If you look at the situation that a home owner pays 60% less tax than I do as a tenant of an apartment and about 40% less than or even with a condo, there is something wrong. I feel like I live in South Africa. I am being discriminated against. I am paying 60% more tax as a taxpayer than an owner of a single dwelling, and this is a very wrong thing.

If that money were partially, not all, directed to the landlord, you would not have this meeting. You would not have this because the landlord, if he were a good businessman, would then out of that set aside a portion for the contingency situation that you have heard about at this meeting, and the other part would he]p him increase his revenues.

Mr Turnbull: Can you tell me how much in tax per year per unit on average is being paid in your building?

Mr Gosschalk: Our building is situated at the corner of Bayview and Highway 401. That is not the cheapest area. You know where I am talking about. It runs around $1,800 for a three-bedroom apartment.

Ms M. Ward: I appreciate your comments. I think you have some valid points on the taxation, that the taxation certainly is not fair.

Mr Gosschalk: If I may interject, I am not talking about fair. We are not here to say please. We are saying to you, do you want to solve this problem? Get to the Minister of Revenue.

Ms M. Ward: I do not think that will solve all our problems. I mean, there is a problem there, yes.

Mr Gosschalk: I will tell you one thing. It will solve 60% of your problems.

Ms M. Ward: I wanted to ask a question about a comment on the third page of your brief. You were talking about work orders and you said none of these infractions would cost much money to rectify. "It has been the only way to get an otherwise...humane landlord to keep up his end of the bargain." I am interpreting that as meaning that you had to get a work order in order to get repairs and maintenance done, but you described this person as humane. I wonder if you could clarify that for me.

Mr Gosschalk: Two ways; as I say, we have 3,000 constituents in these buildings. Mayor Lastman calls me the mayor of St Andrews, so you can imagine what I mean. But the thing is that at the same time, Belmont Construction is very humane. I mean, they do not just put people out of their apartments and things like that. I find them very nice people. But they are procrastinators and they take advantage of every rule in the book. So, in the last seven years you will find seven years of work orders and the last ones are really bad. The clerk will be able to supply you. I gave her the copies.

Ms M. Ward: Things that relate to safety?

Mr Gosschalk: Everything, and most of it is not costly; it is not much money involved. In fact, let me tell you, ladies and gentlemen, that our landlord, Belmont, has not asked for a rent increase -- now get this -- since 1983. That is to cover expenditures. The only time they asked for a rent increase was last year because of higher property taxes. Do I need to say more? So it is obvious -- and I am doing this in the open, on television -- that Belmont for seven years did not really need to have an increase in rents to operate. They are very professional people. They own a lot of apartment buildings around the city and you know that, Ms Poole, too. So if they had not asked us for an increase for seven years they are doing something right, and as tenants we are doing something right.

Ms M. Ward: So you are working quite well together?

Mr Gosschalk: We have a very good working relationship. It is like in a boxing match. You know, after the game is over you go for a coffee. The point I am making is that you people are just barking up the wrong tree. You are listening to all those landlords coming in with their complaints, you listen to all these tenants coming in to complain, but you are not doing it the right way. The person who should be here in the centre of that arena is the Minister of Revenue, answering questions why she is discriminating against tenants and discriminating against landlords who own apartment buildings. If you have that problem solved, you have 60% of your rent control solved. I mean that. I studied this for four or five years and the very person who got me on to this who is now a Metropolitan Toronto councillor is Howard Moscoe. He came to our annual meeting five years ago and said, "People, if you are going to solve this property tax situation, you do not have to worry about these drastic increases."

The Vice-Chair: Thank you for your very good presentation.



The Vice-Chair: The next presenter is Barbara Carpenter. Welcome to the committee. You have 10 minutes to make your presentation and then the committee will have a discussion with you for 10 minutes. We are looking forward to your remarks.

Mrs Carpenter: Can I mention, it might take maybe a couple of minutes extra to read it. Would it be possible to have those extra couple of minutes?

The Vice-Chair: It would be if one of the parties agrees. Fine.

Mrs Carpenter: Thank you very much. To the Chairperson and committee members, I am Mrs Barbara Carpenter and I am a small landlord representing myself.

I hope the NDP government has put aside enough money to cover its next year's capital expenditures because we do not want to pay any more than the 5.4% tax increases. I am convinced that you are able to figure that a big group will give your government more votes than us minority landlords.

My husband worked 15 years in the mines; he was in the union. Some of his money was given to support the NDP. They were led to believe that the NDP was a party that was going to be fair to every person. Now in power, they want to destroy the small working people by taking away their life savings to give to a bigger group of people called tenants, who give more votes. Tenants will benefit now but will suffer in the long run, and I will assure you that the people of Ontario will recognize this and will speak out next time around. I am sure people believe in small business and fairness for everyone.

There was an injustice done during the war and now the government is paying back and apologizing for what it had done. I complained about the government before for not being fair. I believe that they were not fair. Now, looking back, I am realizing how lucky I was then, because this government wants to take away what took me a lifetime to make.

For some extra votes you will be destroying hardworking people who did work the extra hours to put in for their retirement. Before receiving their retirement only half of it will be turned over to them; the other half goes back to the government for capital gains. This money should go back to the tenants in need to pay for rent increases.

NDP members are saying that the rent is supposed to pay for the repairs. This is not the way it works and never did. Repairs are paid after the work is done. It is the cheapest way of doing it. The way it is suggested by the members is to put money aside, but it will cost more.

Today, for example, money that is put aside only gains interest of 9%, but your mortgage that you are paying is 13.5% on revenue property; therefore, 4.5% is lost and is an extra cost and could be very expensive. This is nonsense. It would put small investors out of the reach to become landlords, including landlords that build, because of this extra money needed. The ones who will benefit from this nonsense will be the lenders. In the long run, it will destroy the rental market.

I believe the co-ops get extra funds for repairs from the government. If they do, then why not subsidize the tenants in need when the repairs occur in the landlords' apartments? It would be a lot cheaper and the landlords would be more willing to provide apartment units. All concerned will benefit in the future.

I will say to the NDP government that I have helped the poor and the homeless by giving them a bed, not knowing if they would or would not pay me back. Some did, some did not. I also welcomed people from the street that wanted to take a shower, transient people and people in need. I wonder how many have done this personally.

I am a landlady in the Sudbury area who has found herself in a devastating situation. In March 1988, I purchased a property from the city of Sudbury, a 75-year-old revenue property consisting of 14 units. The city of Sudbury had owned the property for a number of years. They originally bought the building in order to demolish it and use the property for a road allowance. Their plans changed and they no longer needed the land.

The property came before the council because a decision had to be made in reference to 108 Pine Street. The tenants appeared before council wishing to purchase the property but it was in the newspaper that the building would be too costly to make co-op out of it. The tenants backed out.

The council passed a motion to accept sealed bids from the public. A day was set aside to look at the premises. There were 60 people for the showing. They showed us a boiler room and one empty apartment and stated that all other units were similar. I submitted a bid of $135,000, which was the value of the land. They accepted my bid.

After the purchase I went through the building and then had to make the decision whether I was going to fix the building or tear it down. After establishing a cost to repair the building, I realized it would be too costly and I could not raise any money on an old building. If it were a new building, there would be no trouble at all. I had decided I was going to demolish it but I was told by the city of Sudbury that it was against the Residential Rent Regulation Act. I had no other avenue but to remodel the building.

I went to the rent review board to assure myself that I would not get hurt again. The reason I say that is because in 1977 I made an application to the board for one building at 17 and 23 Levack Drive for an increase of rent and I was denied a break-even point. The reason was that I was taking too much of an increase from $125 to $225 and that I would have to recover my losses over the next five years. It took me two years for that decision. I lost my building to the city for back taxes, a beautiful, large 39-unit building. If you do not have revenue, the building has no value for anybody.

Debbie at the rent review board assured me that under the present legislation which is in place I would be allowed my capital expenditures and they would be passed on and I would receive my rent increases after all work was completed and paid for. Because of its age and lack of maintenance over the years it required extensive repairs to simply bring it up to par with other units in the city. Certain units could not even be rented in their present state.

For example, you could see the cement in the bathrooms where the wood had rotted away, original bathtubs on legs, laundry-type kitchen sinks attached to the walls, separate hot and cold taps with rubber tube to each to get mixed water temperatures, no cupboards and numerous leaks in the roof with ceilings falling down. The entrances into the building were four by four, having three doors opening from the entrance. Doors were only 28 inches large and stairwells were only 28 inches wide. It was a real fire trap.

The property is situated in the downtown core of Sudbury. Because of its location we felt it would be a secure investment with full possibilities. The building consisted of 10 two-bedroom apartments, each approximately 900 square feet, and four one-bedroom apartments, each approximately 750 square feet.

Due to the poor conditions, the rents ranged from $134 to $178 per month. This required us to go before the rent review board to have our rents raised to $140 and $186 to cover our expenses the first year. They were only allowing 5% over the next five years to recapture my small financing. At this time, we also projected that extensive repairs would be made in the following years, 1989 and 1990. They told us to come back and see them once all the repairs were completed to be able to have our capital expenditures given back to us. After all the work was completed it cost us over $400,000 over a period of 18 months. We then found out all we can recover is 12 months of those 18 months. We agreed to these terms and we applied on 2 October 1990. While we were waiting for their answer, we were preparing the units to be rented for 1 January 1991. The units are totally remodelled and still empty.

The government came in with new legislation to freeze all capital cost expenditures and phase-ins. This means that I will not be able to recover my $400,000 savings and demand loans, which I put into the building; therefore, I will lose my building again. They now expect me to rent these newly remodelled apartments for $140 and $186 per month.

I am sorry.

The Vice-Chair: Take your time. We will not deduct it from the time you have before us.

Mrs Y. O'Neill: On another occasion such as this we took a five-minute recess.

The Vice-Chair: Perhaps we could take a five-minute recess.

The committee recessed at 1529.


The Vice-Chair: The committee is back in order, Mrs Carpenter, if you would like to continue.

Mrs Carpenter: I put it to you, who shall pay for the repairs put into my building? I say it is the previous tenants who should have paid. They got the benefit of the cheap rent. My rents are from $140 to $186 and my basic expenses now, which the new government allows, from January 1990 to December 1990, a total of $20,604.41. My proposed revenue is $28,260 empty. Now the new tenant will have to pay what the previous should have paid.

I do not benefit from it, but it does give out a big rent increase. This is how it comes about. This is the type of case that makes the landlord look bad. The previous tenants cannot be blamed and I do not blame them, but I say to you, the blame has to be put on the previous landlord for mismanagement, because he did not pass on the cost of repairs.

The city did not make any benefit. They were making a big deficit every year. Part of the deficit includes the mortgage interest for one year of $19,200; heat, $5,333; hydro, $3,471; water, $1,290; taxes, $9,201. That does not include insurance and maintenance that we do not know of. Rent from the building was $23,580; therefore, there was a deficit of approximately $14,961 every year.

The city did have a good reason, because it was bought for a road allowance and was to be demolished. This example may apply to many buildings across the province. This may very well be the reason for the 3% statistic for very high increases and not a flip.

In my case, the previous owner made a deficit every year, but also lost on the selling price, $25,000 after 18 years. The reason for this is because the city helped the tenants. This will apply to any individual landlord who does not keep increasing the rent. Will the government be willing to lend to the landlord the extra money to cover for future repairs?

Today, I have an empty building waiting to receive my order as to what I could charge on these 14 units, but my answer from the rent review office is: "Your application has been shelved. You have a two-year waiting period." I applied for the months from March 1989 to February 1990, but I only applied on 2 October 1990. Seeing the government went retroactively in its moratorium, I then asked to have my application brought back to September 1990. I received a very nice letter from the rent review office. I will read it:

"Under subsection 19(5) of the Residential Rent Regulation Act, 1986 it has been determined that it would be unfair to grant the extension of time. Therefore, your request has been denied."

My whole livelihood is in your hands and my case should be looked upon as an individual, as others should be also. No case is the same and they should never be generalized, meaning being painted with the same brush. I cannot comprehend how retroactive legislation can be passed by a government that represents all people of Ontario.

I made capital expenditures by the law and the NDP government came along and changed the law after work has been completed. This is law by the old legislation given by previous government. There should be an adjusting period for those already committed. I have the right to recover money spent which provides a home for people who need it.

Mr Tilson: I do not think you referred to the letter to you from Central Guaranty Trust. I find it an interesting letter, specifically the statement from the corporate financial division. Mr Munro, in a letter to you dated 19 January, says: "Although the building has recently been renovated, the projected revenues are not sufficient to cover the proposed mortgage payments. Should the situation change and the building's revenues increase, we would like the opportunity of reviewing the transaction again." So you have been turned down flat.

Mrs Carpenter: That is right.

Mr Tilson: Because of Bill 4.

Mrs Carpenter: Yes, I have been.

Mr Tilson: Have you made any applications to other lending institutions?

Mrs Carpenter: No, I have not had the chance. I wanted to come before you.

Mr Tilson: I think your statement says it all. I suspect one of the questions that will be asked by the government, and anticipating that, I will simply say that one of their favourite questions is "You made two bad investments." That is what they will tell you. "Tough." What is your reaction to that?

Mrs Carpenter: I did not think I was making a bad investment because I was updating my apartments to bring stock on to the market and give a good home for people who wanted it. My husband and I have run a rooming house for 20 years. We have looked after 52 tenants in those buildings, two people looking after 52 roomers for over 20 years, and we know that they need homes.

Between Christmas and New Year, I heard a newscast. Mr Cooke stated that they were going to take over the rooming houses and were going to renovate the premises and were going to be the landlords of Ontario. Now, a survey was taken and statistics were taken that to look after a boys' home it takes a staff of six people to look after one unit. My husband and I looked after 52 roomers for 20 years, just two people. How much money is the government going to pay to look after 52 roomers with a staff of six people to look after one bed? I cannot understand it. If we are not doing a good enough job, is anybody else going to do a good job?

Mr Tilson: My guess is you have just answered your own question. That is what they intend to do. They intend to devalue the housing stock of this province and literally take it over. I think the problem is where they are going to get the money to do the very things you are talking about. One of the issues that has been hinted at about the future green paper, which is the proposed permanent legislation that we have yet to see, is that there has been a hint that they will suggest a reserve fund be set up in each building. It has been vague as to how much that reserve fund will be or where it will come from. Do you have any thoughts on that, as to whether you think such a reserve fund would work, specifically with making capital expenditures to major renovations?

Mrs Carpenter: No, I do not figure it will work at all, because when a landlord enters into a property he puts most of his life savings into that property. If he has to put money aside for a reserve, he is not gaining and neither are the tenants gaining. I stated in here that if there is a reserve put aside, you are going to make 9% on that reserve, but if it was put into your mortgage, you are paying a mortgage of 13.5%. You are losing and so are the tenants losing. They are losing that 4.5%.

The Vice-Chair: Mr Cooper has a short question.

Mr Cooper: It is more a comment than a question. While we appreciate your presentation asking for an exemption, basically everybody who comes before the committee could ask for an exemption and then there would be no sense in the legislation. That is why we cannot have people coming in here and pleading for exemptions, while we sympathize with your case.

Ms Poole: Mrs Carpenter, I would like to thank you for coming and telling your story. I know it is very difficult for you, so we particularly appreciate the fact that you made the effort. I really only have the one question. The rents that you named, $140 per month and $186 per month, are extremely low. With all the vast improvements you made to the buildings, if you had been able to go to rent review, what would your new rents have been?

Mrs Carpenter: My rents would probably range between $500 to $600, which is below standard in Sudbury. The average rent for a two-bedroom unit is $612. And it is a totally new unit. We are not asking extremes. When you say 150% to 200%, that does not mean anything, not a thing at all. It depends on what the rent is going to be and what the rent was originally. We are not asking for over what we should have.

Ms Poole: I think you have made that point very well, that you cannot just rely on statistics. You have to ask where you started from and where you ended up.

Mrs Carpenter: Every person has an individual case and it should be heard personally.

Ms Poole: Again, thank you for coming. I believe Mrs O'Neill had a question for you.

Mrs Y. O'Neill: Would you be able to outline very briefly any improvements that you would consider health and safety improvements that were necessary for the health and safety of the people who were going to live in the building?

Mrs Carpenter: I will tell you they had four-feet by four-feet entrances into the building. They had the main door opening in. They had an apartment opening up and another apartment door opening up to that four-by-four entrance.

Mrs Y. O'Neill: So you had the fire department inspection on your back.

Mrs Carpenter: Yes, there is no possible way. They had a 28-inch door and a 28-inch staircasing. Nowadays, with the big furniture and even an appliance, even a fridge or a stove, how do you get it up those stairwells? I know it was a big cost at the time.

Mrs Y. O'Neill: Are there any others that you can think of quickly?

Mrs Carpenter: The roof was leaking. The roof was falling down. Sure, the city neglected it, but something had to be done because I could not tear down the building. There was no way I could tear down the building. I had to do what I had to do and I gave affordable housing to people.

Mrs Y. O'Neill: And you feel you got just prices on the work you had done?

Mrs Carpenter: Yes.

Ms Poole: If we have time for one more question, Mrs Carpenter, you have explained your plight in your brief, that you have gone to the bank and you cannot get refinancing as of this moment. What are you going to do if you cannot get that refinancing? Will you lose this property and your life savings?

Mrs Carpenter: I will sue the government.

Ms Poole: You have put your life savings into this building?

Mrs Carpenter: Everything into this building. I have worked hard for 20 years and every cent went into this building. I do not think it is fair.

Ms Poole: We can only hope this bill can be amended to make it fair to you so that you do not lose your life savings.

Mrs Carpenter: And to everybody who is in the same position.


The Vice-Chair: The next delegation before us is to be the North York Interagency and Community Council. Pat O'Neill is representing them as the housing advocate. Good afternoon. Perhaps you would just identify yourself and your group for us.

Ms P. O'Neill: Yes, I am Pat O'Neill and I am the housing advocate with the North York Interagency and Community Council, which is the local social planning council for the city of North York.

We would like to express our general support for Bill 4. Maybe as a little update on North York, I think many people still consider it a bedroom suburb where the majority of people are home owners. I think we have certainly seen a change in Metropolitan Toronto over the last number of years and in fact the majority in North York are probably now tenants. Officially, it is about a 50-50 split, but given some of the restrictions in North York there are a lot of apartments which are not official apartments. They are apartments people have in their basements in order to manage their mortgages. So we probably have a majority of tenants in North York.

We have larger than average household size in North York as compared to Metro. In some areas of North York, income is lower than the Metro average and in some areas it is higher. In the social planning area we see a lot of problems as a result of the lack of affordable housing, particularly for those who are hard to house, those with mental health problems, families, often seniors, and of course for the homeless it really is a tragic situation.

We do not feel, though, that it is up to landlords to subsidize those in need of subsidized housing. Obviously that is a function of government and the fact that the province itself has not built fully subsidized housing units since 1976 has certainly increased the problem as far as affordable housing within the Metro area is concerned. There have been some co-op housing units built, but a very small number. The waiting lists for subsidized housing have continually grown and it has become a major problem, particularly since a number of communities in North York now are primary reception areas for immigrants. A lot of people are earning minimum wage, and on minimum wage often the whole of one individual's income can go on rent, so we really do face some quite tragic circumstances.


As I said, we do not anticipate that landlords should be subsidizing those in need. We feel that is a government responsibility. We would like to say that we think the government possibly has some room to assist the smaller landlord, because, again, many of them are in the position where they do not have flexibility. Their fixed costs have gone up dramatically and for those smaller landlords with 10, 15 or 20 units there is a mechanism in place for review for legitimate repairs. We think possibly the government could afford to be somewhat flexible in looking at those smaller landlords, where the repairs are necessary for safety reasons, to allow them to continue with that process until the new legislation is developed.

Financing should not be a legitimate cost passed on to the purchaser. We agree that this is a matter of business and that if you cannot afford to buy and to refinance, then you really should not be buying. We certainly have seen some extreme cases. It is not a question of continually flipping; it is a question, occasionally, of just one sale because the cost of housing has changed so dramatically.

Houses in my own neighbourhood that sold in 1980 for $40,000, for which obviously one could manage the mortgage quite nicely, resold 10 years later for $150,000, which meant that the mortgage costs were out of sight. If people were buying those as an investment and renting them out, the cost literally doubled from $600 a month rent to $1,200 a month rent, which meant that two families were having to share a three-bedroom house. We were almost at the point of subdividing bedrooms, so it is often not a question of continually flipping.

Because of that difference in that 10-year period, one sale can make such a dramatic difference to family life and whether people can actually afford to live in the Metro area. We think that really is not something that should be considered when looking at legitimate costs. If people cannot afford to buy them, then they should not be buying them for rental purposes.

That is all I have to present, but I would certainly be willing to entertain questions.

Mr Winninger: To what extent have you found that financing costs have been driving up rents beyond the financial competence of your clients?

Ms P. O'Neill: I would say that certainly in the last five years it is primarily the financial costs that are causing the biggest problem. That is certainly the major factor, because house prices have increased so dramatically and any refinancing, any selling of properties and refinancing, just escalates out of all proportion.

Ms M. Ward: I would just like to comment that I think you made a lot of good points there, particularly about the financial loss not being supportable. I think you do have a point that small landlords in some cases might have some need there.

Ms P. O'Neill: We find it particularly in older neighbourhoods with older people who have made an investment and really are not making a lot of money. As I say, with the fixed costs, with hydro, taxes, the regular maintenance costs, it really does become a hardship for those people.

Ms M. Ward: There is a provision in Bill 4 for passing through extraordinary costs in taxes, utilities and higher interest rates when the need to refinance comes up. There is some provision there. I would just like to thank you for your comments.

Mr Mahoney: First of all, I am assuming your agency and community council are either affiliated with or associated with the city of North York. Do I understand that correctly?

Ms P. O'Neill: We work closely with the city of North York, but it is a council made up of community groups and agencies within the city of North York to look at social planning issues across the city.

Mr Mahoney: Do you have any concerns about the production of affordable rental accommodation from the damage this bill might do to investor confidence to build new rental stock or to buy existing stock and renovate and repair, from the sense of the people you are representing, who in essence would be folks who are unable to speak for themselves, either the very small landlords or individual tenant groups? Do you have any concerns about numbers?

Ms P. O'Neill: .We have actually seen no evidence of any investor interest in building rental housing in North York for some 10 years, so it would not be new. Rental accommodation is not being built. Condominiums are being built because they can be sold and are a quick return. We have not seen rental housing being built. We have not seen the government building rental housing. We have not seen private industry building rental housing.

Mr Mahoney: What about the second part, though, about either purchasing and renovating or existing landlords putting money into their facilities? We have heard people say that ultimately tenants will suffer from this philosophy and I just wonder if you have looked at that.

Ms P. O'Neill: In general I think we support the principle that if you are investing in property, then maintenance really should be part of that investment the same as it is for condominium owners or individual home owners. You invest in your own property. You upkeep your own property because it is to your own benefit. I think it is a pretty fair principle. The disclaimer there is that given that there have been controls for some time and that some of those costs, particularly for the older, smaller units, have been fixed, we would have some concern there for the older, small units. We feel that is where there should be a little flexibility around needed repairs.

Mr Mahoney: Are you suggesting exemptions based on age and size?

Ms P. O'Neill: We are particularly thinking of the duplexes, the fourplexes, those kinds of units. We feel there could be some flexibility there and perhaps should be.

Mr Tilson: Are you a planner or do you have planning people who advise you and your organization?

Ms P. O'Neill: No. I am a housing advocate, not a planner.

Mr Tilson: Okay. It is just that I think you have probably put your finger right on the nub of the whole problem in that the approach this government is taking, and perhaps the previous government had taken, does not solve the real problem, which is, in my view, a social problem. There are many modest-income people who simply cannot afford rents no matter what level they are at.

You have referred to your area as having more and more people becoming tenants, and I guess specifically the potential of illegal basement apartments. You did not say it like that, but you implied that, and the difficulties, of course, of people trying to keep their houses and simply renting out their basement or portions of it, which probably is illegal.


Ms P. O'Neill: North York is now looking at its housing policies, given the change in provincial legislation, but we are just in the beginning of that process in North York. We are really just assessing what there is and what the needs are. I am hoping there will be some flexibility within the city of North York in terms of housing, because every area of the city in fact has its own way of increasing its housing stock, whether it is rooms for the servants or whether it is a basement apartment. There is that much flexibility.

I think, yes, the city itself needs to look at that and we will make some changes. Again, it is always easier to criticize when you are not in a position of doing anything.

I recognize it is difficult to govern, but in fact as I said, since 1976 there has not been assisted housing built. I know that previous governments have wanted to, but there is a problem with building assisted housing. The other problem is, there is very little between assisted housing and the other end of the market.

If one wanted now to sell a modestly priced home, and I understand that $150,000 is now a modestly priced home in North York, there is no alternative to move into. I am in the situation where I have a three-bedroom home, I am on my own, I do not need a three-bedroom home, but there is not a one-bedroom home that I can buy in order to free up a three-bedroom home. There is nothing in between.

Mr Tilson: We have heard many, many people saying that Bill 4 is not going to work, rent controls are not going to work, but I think the other area that I am looking for is other suggestions; in other words, perhaps the revision of existing bylaws, municipal bylaws or provincial policies to encourage different types of housing from the existing stock that we already have. If people are not going to build, perhaps we should start taking another look at what we already have. I am glad to hear you are suggesting that.

Ms P. O'Neill: It is a beginning.

Mr Turnbull: Ms O'Neill, you commented that there is no new housing being created, certainly in Metro Toronto, rental housing. What would, in your opinion, be the reason for that?

Ms P. O'Neill: I think it is fairly obvious that by building condominiums one can get a quicker return on the investment. Most people in the housing market, apart from governments, are in fact in the business of getting a return on their investment. It is a business.

Mr Turnbull: Are you saying it is not a satisfactory return on investment to build rental housing today?

Ms P. O'Neill: It has not been for a long time.

The Vice-Chair: Thank you for making a very good presentation to the committee.


The Vice-Chair: The next group to be presenting is the Centre for Equality Rights in Accommodation, Bruce Porter. Good afternoon, sir. If you would identify yourself and your organization and your position with the organization for the purposes of Hansard, it would be appreciated. You have 10 minutes to make your presentation and the committee will have a discussion with you for 10 minutes.

Mr Porter: Thank you, Mr Chairperson. I am Bruce Porter. I am the co-ordinator for the Centre for Equality Rights in Accommodation, or CERA for short.

The Centre for Equality Rights in Accommodation is a human rights advocacy organization. We assist people with claims of discrimination in the area of housing and do general public education in that area and work throughout the province.

We work predominantly with the Human Rights Code, to some extent with the Canadian Charter of Rights and Freedoms and with international human rights instruments such as the International Covenant on Economic, Social and Cultural Rights. We do not work very often with the Residential Rent Regulation Act and I would not claim any specific expertise on that piece of legislation. I, however, thought it might be useful for the committee to hear a few bits of our perspective coming at housing from a human rights standpoint and I would be asking in essence for the committee to consider the aspect of housing as a human right when you look at Bill 4 and the general issue of rent regulation in Ontario.

When we advance equality rights for disadvantaged groups, we now speak of equality rights from a broader perspective than simply treating everyone equally or the same. We have come to recognize that it is not good enough to provide just formal equal treatment to someone, for example, with a wheelchair by treating the applicant in the same manner as someone else. We have to take positive measures to ensure that the formal equal treatment actually means something, and so it may involve positive obligations like the provision of wheelchair ramps.

I would like to suggest that those kinds of positive obligations fall on various sectors, both on private individuals and on government, and that they involve in the area of housing things that range from the issue of housing supply through the area of regulation of existing stock, and that, I think, is where Bill 4 fits in.

When we speak of housing as a right, people often think: "Oh, well that's a great idea, but can we really afford it? It would mean that the government would have to supply housing for every individual in Ontario." In other words, we think of it predominantly from the perspective of supply. I would suggest to you that is a fairly narrow view of what housing as a right would mean and it is also a fairly unaffordable one. For the government to take seriously the notion that housing is a right would require a fairly broad range of initiatives, and many of them, perhaps the most important, are in the area of regulation of existing stock. Particularly when we consider that 85% of the housing that we will ever need has already been built and already exists, the important initiatives may be very much in the area of access to and preservation of the affordability of that stock.

I think that you have to consider as well when you are looking at rent regulation that the most disadvantaged groups in our society are predominantly renters and that those people, particularly women, single mothers, people with disabilities, elderly people on fixed incomes, those living on social assistance, all of these groups, are protected under the Human Rights Code, but they need positive protections from unpredictable increases in their rent. These are the people who are predominantly affected by inadequate regulation of rents in the private sector, and most of them rely on the private sector for finding affordable housing.

I want to make it clear that we are not asking landlords to be charities for disadvantaged groups and I do not think that is what Bill 4 proposes to do, certainly in the way of interim legislation. Rather, it proposes to recognize the special nature of a landlord's business. It establishes that landlords may operate their businesses only within established parameters and one of those parameters must be a high degree of consistency and predictability in the rent people will be paying.

Sometimes I think that it is useful to unearth some of the inequalities that we deal with by considering how different groups are treated differently under the law and the kinds of assumptions that we make about different groups. I was a tenant for many years and was myself the victim of a couple of economic evictions with rent increases of almost 100% because of landlords' taking over properties and refinancing them. But I recently became a home owner and let me tell you about my home owner's nightmare that the same rules that applied to me as a tenant might be applied to me as a home owner. The nightmare is that Canada Trust, which is my mortgagor and owns approximately 80% of the house that I live in, announces on a form 2 that I receive in the mail that because it owns the house it has decided it is not quite up to snuff and it would like to do some major renovations. They want to do an addition to the kitchen and they want to completely redo the hall and put marble tiles down and they want to basically renovate the entire interior.

I say, "Well, that's a great idea, as long as you pay for it." They say: "Oh, no. You're the owner; you pay for it." I say: "But I cannot afford it. I work for a struggling nonprofit organization. When I bought this house I bought what I could afford and I assumed that I would be able to continue paying the same payments." They say: "No, sorry. That's tough luck. We're the owners and we are deciding for you that all of these changes are going to be made, and furthermore we are going to apply the principle that is used in the Residential Rent Regulation Act that even though you pay for all these improvements, we end up owning them in the end."

I say: "Oh, my God. That doesn't seem very fair." They say: "But you're the co-ordinator of the Centre for Equality Rights in Accommodation. I thought you believed that everyone is entitled to equal treatment." At that point, I wake up in a cold sweat and am glad to realize that it is only a nightmare.

The point of that, I guess, is that we have to think about the fact that tenants have homes and that they are entitled to the same kinds of considerations that all citizens and people living in this province are entitled to. It is the very essence of a home to have some predictability to it, to be able to set up your children in day care, to find business close by so that you can get home in time to pick the kids up from day care, to establish roots, to make friends, to become a part of that community, without thinking that suddenly next year you are going to be asked to maybe double the amount of rent that you pay simply because somebody makes some decisions for you about changes that are going to be made to your home and refinances something that is actually the place that you live in and rely on.

I would like to make one final point and that is the question of access, which of course is the fundamental issue that we deal with at CERA. I have been disturbed that in some of the debates around rent controls, landlords have pointed to evidence that the most affordable and decent apartments end up being rented by people who are not the lowest-income households. From that, they derive the fact that rent controls do not work because they are not helping the most disadvantaged households.


I am astonished that what I consider basically economic discrimination practised by landlords is used as a way to oppose rent controls. The issue is not rent controls, but let me just tell you why it is that in some cases the most affordable apartments are not available to the households who most need them.

Most landlords now in Ontario have very sophisticated application procedures in which they ask people how much income they make, what kind of car they drive, where they bank, what their credit rating is, what kind of job they have and how long they have worked there. On the basis of that, they will take several applicants for the same apartment and choose the household with the highest income, and those are the people who end up getting it. That happens in Vancouver, where there are no rent controls, and it happened in Ontario when there was rent review and it will happen in Ontario when there are adequate rent controls. It is something that has to be of concern to us, however, that when we work to preserve the affordable housing stock, we should also have corollary initiatives to ensure that the affordable housing stock is accessible to the people who most need it.

We at CERA have taken some initiatives using the Human Rights Code to show that this kind of economic discrimination is contrary to the Human Rights Code because it adversely affects all of the groups that are listed there for protection. It is women and disabled people and single mothers who are going to be cut out by those sorts of income criteria. We would benefit from more direct legislative protection from income criteria and economic discrimination, which has the effect of denying the most appropriate and affordable housing to the people who most need it, but that is a separate issue. We also need rent controls in order to preserve the affordable housing stock that is there and to give the people who are most disadvantaged in our society the same kinds of sense of predictability and stability in their housing that we all have to assume is a basic and fundamental human right. Thank you.

The Vice-Chair: Thank you. The Liberal Party is first in the rotation. Mr Mahoney has some questions.

Mr Mahoney: I am interested in your analogy of your nightmare. The reality is that while the mortgage company obviously does not have the option of coming in and effecting changes to your home and passing on the costs, there are examples in the not-too-distant past where mortgage rates escalated up into the 20% range, which in fact had the same effect as causing economic eviction to many people who were home owners, who not only had to give up their homes as a result of the increased payments due to the usurious interest rates that were being charged but wound up losing their equity, their sweat equity and their dollar equity, that went in. So the reality is that there are examples of that nightmare indeed that have occurred that did not simply occur as a result of changes to the kitchen in the home, but something even more insidious, and that is the cost of the money that was used to buy the home.

It is not so much a question of whether or not you set terms and conditions for regulating rents or rent increases. Certainly that has been done under the rent review system that was originally introduced by the Conservative government under rent controls. It is the types of modification. Do we get to the point when your organization is attempting to -- as you say at the end of your presentation, you think it leads us to a threefold housing strategy: to create new supply, regulate existing stock and improve access.

I certainly agree with improving access, but if you take your nightmare example to the extreme, then you have got to put on artificial interest rate levels and cap them as a government and bring in regulations to do exactly that and, as this government is doing, bring in what is the most insidious aspect of this, and that is changing the rules after the game has started.

How would you ever get anyone other than the government itself to create new housing supply or to co-operate with agencies such as yours in the areas of accessibility when any sense of confidence he had in investing in his own business, be it large or small, is shattered by, not all aspects of this bill, but very clearly by the trust-breaking aspects of Bill 4 in the retroactivity and a few other areas?

Mr Porter: I think the issue of predictability is relatively important. I have emphasized how important it is from the standpoint of tenants. I think this tends to be the perspective that we forget about and it gets lost in the equation. But I am advocating a shift of values in our society to the point where we recognize the special nature of the housing business so that anyone entering into that business knows exactly what the rules and the regulations are, knows that he cannot go into it on the assumption that he will ask for a 60% increase from the people who are living there. I think once those assumptions are built in, then people will not feel there is a lack of trust or stability in the market.

On your first point about the effect of interest rates on home owners, I think there tends to have been a fair bit of concern and sympathy for home owners when that has happened, but really, to make that analogy work, you would have to suggest that the home owner, in order to be in the same position as the landlord -- as a home owner, I would be able to purchase my house for whatever I wanted at even these very high interest rates and know that I can just pass it on to somebody else and have it paid for.

Because I know that I cannot pass it on to somebody else, I have to deal with it in terms of my own personal affordability and I will not pay as much for the house if the interest rate is higher. That is to a large extent what is responsible for what has happened in the housing market in the last year, but that would not have happened if people who are buying houses had somebody else that they could have foot the bill. I think it distorts the market in order to have an automatic pass-through of those kinds of costs, which ends up putting landlords in the situation of being able to pay anything for an apartment building and know that they can recover it all.

Mr Turnbull: You said that you now live in a house. If you -- and I do not need exact numbers, but just give me a sense -- had to put a new roof on your house, approximately how much would it cost you? Would $3,000 be a reasonable amount of money?

Mr Porter: Yes, I think so.

Mr Turnbull: It is a lot of money for anybody to spend. Would it be reasonable to say that this would represent more money for you than somebody who was on double the income?

Mr Porter: Yes.

Mr Turnbull: And equally -- you see the direction I am going in -- if somebody were earning half your income, it would be even more of a strain for him to put a new roof on it.

Mr Porter: Yes.

Mr Turnbull: The basic problem we have when we are talking about rental accommodation -- and we have had expert testimony here that our rental stock is aging, to the extent that a great deal of it is 25 to 35 years old. We are now encountering major renovations to those buildings, which perhaps would not have been needed if we knew the technology in those days as to how to build the way we do now, but by the same token cost very large sums of money.

We have landlords who have renovated their buildings within all of the specifications of the existing legislation before this legislation came along. They went to the bank, they borrowed the money in order to do this, and I have to emphasize to you also expert testimony from the Ministry of Housing witnesses. They have agreed that large capital items were never included in rent review; they were always considered to be added after the fact. That is a given. These landlords have now spent the money and are told to forget it. They have gone to the bank and borrowed the money and spent it. They cannot get it back, even though the law was very clear that they could when they spent the money. How do you handle a situation like that?

Mr Porter: That is the point I think I alluded to earlier, that in changing the way in which the housing sector operates, there are going to be people who did some things assuming one kind of set of values who may end up being hurt. I think that probably the government is attempting and will continue to attempt to be as sensitive as possible to that kind of transitionary --

Mr Turnbull: Excuse me. You misunderstand. They are not assuming anything. They were acting within the law and the government is doing nothing for the transition period. They are simply saying you are not allowed to pass that back.

Mr Porter: You said they were working under a rent review system which assumed that they would be able to recover that and now they are not able to recover that.

Mr Turnbull: The wording is, "They were allowed to recover it." It is quite clear in the legislation and they have gone out and borrowed the money and now they are being told: "Forget the fact that you borrowed the money. You are not allowed to get it back." Many of them were working on deficit situations. Now they have a worse deficit and we have heard testimony from many witnesses that it is their life savings that they have put into these small buildings. What do you say to these people? You are an expert on human rights, so that is why I asked how you would respond to these people.


Mr Porter: As I say, being in the area of human rights, I am not an expert on all the ins and outs of the rent regulation act, but I would go back to the analogy you mentioned earlier about the roof on the house. It is something you assume would have to be done at some point. There are some real tragedies among home owners, too, who have been hit by high interest rates or unforeseen repairs. I have been hit by a few of them myself, but I would not expect anyone else to pay for it. I think I am responsible for having paid a certain amount for the house and to assume that maybe the roof is going to have to be repaired in a couple of years and to have made those kinds of planning decisions.

Mr Turnbull: They did make those decisions.

Mr Winninger: Mr Porter, many landlords would argue that in the absence of rent controls and in a free market, through competition they can deliver affordable housing to tenants. What has been your experience as a co-ordinator of the Centre for Equality Rights in Accommodation as far as the free market system delivering affordable housing is concerned?

Mr Porter: It clearly does not deliver. It is a convenient myth to be able to blame that fact on the existence of rent review or rent controls. I have the privilege of working in a couple of national organizations on housing issues, so I meet with tenants and other low-income activists from across the country dealing with housing problems that are very similar to those we are dealing with in Toronto.

The common denominator for all of us is that we are not getting affordable housing built. The one thing that is not common is rent controls and rent review. Many of the provinces have none, some have some and some have stronger protections, but it does not seem to have very much effect on what the private sector does in the way of producing affordable housing.

I think the message also on a philosophical level is that we are dealing here with something which is not appropriately simply a commodity produced by the private sector without any kind of regulation to protect those whose housing is being provided in that manner. It is like health, like education. There is a role for the private sector, but it is only a regulated role. You cannot allow it to just proceed writing all of its own rules, because there are people's lives at stake, and very important elements of their lives. All of the fundamental human rights which we claim to take so seriously mean nothing if we cannot protect people's housing, and we cannot do that if we simply defer to the rules of the private market.

Mr Duignan: Thank you for coming today and presenting an excellent presentation. Again, it drives home why we need Bill 4. It is time we think of that apartment or that rented house as that person's home. That is forgotten in this debate. Also, you are quite correct in assuming that a lot of this economic discrimination goes on against single moms, a person on a pension, that type of thing, and I thank you again for bringing that to our attention.

The Vice-Chair: Thank you very much for appearing. We appreciate your comments.


The Chair: The next presenter is the Honourable Martin O'Connell. Good afternoon. As I know you have been watching the proceedings, you know what the ground rules are.

Hon Mr O'Connell: I have one of these throat conditions. I hope it will not bother us.

Thank you very much for the opportunity to submit views on the amendments to the Residential Rent Regulation Act, which we have before us. I am going to begin by congratulating the minister and the government on most of these interim initiatives, especially subsection 100f(5), which states, "The minister shall not order a maximum rent for a rental unit greater than that proposed on an application." That has to have been a great embarrassment to ministers in the past, and it is time it was excluded.

Also, for initiating some change with respect to extraordinary operating costs. It is really solely with respect to two examples of extraordinary operating costs that I am going to make my own remarks. With respect, and for your consideration, I am going to propose an amendment to the definition of such extraordinary operating costs found in subsection 100e(1) on page 4 of the interim measures. This definition, as you well know, restricts the range of extraordinary operating costs and other costs for which the minister may make findings. They are enumerated and I am not going to go through them. But I am going to propose the widening of that range on which the minister may make findings in one particular instance. I will be proposing -- and I think you have it in front of you -- that the following words be added to the definition, beginning after the words "residential complex": "and an extraordinary operating cost allowed in a previous order that has ceased to exist as a cost after the effective date of this act." That means there would be no retroactivity other than what is already embedded in the act. The effect of doing that would be similar to a measure described in the explanatory note 1(c), where the minister may make findings with respect to "financing costs allowed in a previous order that no longer exist."

We could draw a parallel to that or expand that to mean other extraordinary costs. I am now going to try to describe the situations in which this could arise and the rationale for including them in the definition. But I first want to get at the simpler one, where I think there is an unwarranted application of the annual guideline to costs, whether ordinary or extraordinary, where those costs are by contract between the landlord and a third party, held fixed and constant for long periods of time. I will illustrate that with land rents.

There is a practice of a landlord selling the land if he owns it to raise funds to build a building and renting it back over long periods of time with anniversaries for renewals. In any case, land rent means that the land rent will remain constant at, say, $40,000 per year for 25 years, which none the less, though constant, gets escalated by the guideline.

That is hopefully not the intention of the application of the guideline, which presumably is to protect landlords against inflationary costs and to follow those costs as they go along. What I am describing is a constant cost, impervious to inflation, yet none the less escalated as if it were. I believe that could be addressed by regulation, in section 118 of the act, paragraph 35, references to which paragraphs are in the proposed amendments to the act.

Let me come back to the proposed amendment to subsection 100e(1). It seems to me that if the proposal is accepted and read in conjunction with the proposed amendments to section 118, paragraph 35, found on page 11, the injustice to tenants arising from present administrative practice, not suggested for change by the government, could be eliminated in a manner that landlords could not complain of and that I think all sides of the House could support.


The problem can be considered this way. Consider legal and accounting fees; these are among the itemized operating costs of a building. They run into extraordinary costs, but the present legislation is not going to deal with them in the way I would like to see them dealt with. Consider accounting fees running at about $15,000 per year that abruptly rise to $250,000 as a result, for example, of an arbitration proceeding with respect to land rental.

I have an exact case in mind, but the principle goes forward without getting into it. In what seems one serious flaw in the act, there is no cap on extraordinary operating costs. If they go over a formula threshold, it does not matter how great those operating costs are -- they are passed on. There is no cap, even when landlords have a considerable control over these extraordinary costs, as they do indeed when they hire legal help and as they do indeed when they go into long-term private contracts with third parties. Usually we are told that an extraordinary operating cost is out of control of the landlords. In not all cases are they that way. That is the number one point.

The landlord may indeed be indifferent to the size of the costs, but they are passed on to tenants. In the illustration we are considering, the 17-fold increase in this item of operating costs, the legal fees, becomes permanently embedded in total rent payable, even though it is paid off in the first year and even though it was a one-year cost only to the landlord. Although that cost has ceased to exist as a cost, in reality it is not removed. It is still there in the maximum allowable rent paid year after year, and to worsen the injury and injustice it is escalated by the annual guideline.

In, say, 15 years on a 5% guideline assumption, this administrative practice holds rents higher by double the original amount. If what I have described is correct -- I would like to believe it is not, but I do believe it is -- there seems no good reason to delay correcting it now. I therefore would commend to you the wording I have indicated and reiterate that by its very nature and non-retroactivity, it cannot be controversial if it is valid. How could it be controversial to say that a landlord does not wish to get paid, year after year, for a cost that has disappeared? I do not think it is controversial, I do not see how it can be objected to and I would hope it could be supported by all sides of the House.

Mr Turnbull: Can you tell me in a general sense what your feelings are about the retroactive aspects of this legislation?

Hon Mr O'Connell: If you are alluding to the capital costs, I do object to that, but that is about the only feature of the retroactivity I have any concerns about.

Mr Turnbull: You object to the capital costs that people have entered into not being allowed?

Hon Mr O'Connell: Yes.

Mr Turnbull: Would it be your recommendation to this committee that it should be deleted from the legislation?

Hon Mr O'Connell: I think there should be a thorough, hasty consideration of all of the factors in there and some kind of adjustment to it, not waiting for the time period to pass by. Speed up on that.

Mr Turnbull: What about the people who have already entered into expenditures prior to this bill being introduced, having borrowed money from the bank to do capital repairs which were needed, and are now being told they are out of luck?

Hon Mr O'Connell: I think there should be some relief in that area, but I do not want to be drawn away unduly from the points I am making, and I hope you would express some interest in them.

Mr Turnbull: I am particularly interested in this, because the broader area of this is very vital to the province and we want to make sure the message is taken back to the government.

Hon Mr O'Connell: Fine, I support that.

Mr Turnbull: The suggestion has been made by many tenants' groups and my friends from across the way that essentially the low rates of return in rental accommodation are offset by capital appreciation. Can you conceive of capital appreciation occurring if you do not allow increased financing from time to time, even if it was only once in five years?

Hon Mr O'Connell: Yes, I can indeed.

Mr Turnbull: How would that occur?

Hon Mr O'Connell: The increase in value of buildings and land. Those are assets.

Mr Turnbull: Buildings are depreciating. Buildings depreciate; land appreciates.

Hon Mr O'Connell: Buildings appreciate too. I do not know how you could say otherwise. If houses cost $40,000 a few years ago and now are $240,000, they have indeed appreciated in value. Those are asset increments, and we should not mix that up with the operating costs which increase.

Mr Turnbull: If your rents are in a sense frozen and only increased each year by the guideline, which allows increased costs to be flowed through to tenants but does not allow capital costs to be flowed through to tenants, and if indeed you could not increase your financing from time to time, how would you possibly get capital appreciation?

Hon Mr O'Connell: I can tell you one way. The landlord, in the case I am describing, is getting legal costs paid year after year after year. He is not suffering.

Mr Turnbull: I am sorry, you are not answering my question. I am not talking about a house or an office building, where you can sell it readily, based upon the income you can achieve from time to time. I am talking about a controlled market. How do you achieve capital appreciation if you are not allowed to flow through capital expenditures and you are not allowed to flow through, from time to time, increased financing?

Hon Mr O'Connell: There are two answers to that question. The first is that landlords are in business. I do not have any concern for them with respect to capital appreciation. I do have concern with respect to the operating rents. Second, it is not a controlled market, it is a reviewed market, and these costs do flow through; as a tenant, I know they flow through. In addition to the guideline, there are other techniques left in the act to adjust those.

Mr Turnbull: Under Bill 4, you are not allowed to flow through those.

The Vice-Chair: Mr Duignan has some questions.

Mr Duignan: Thank you for appearing before the committee this afternoon and making an excellent point. We on this side will give this every serious consideration later on in the proceedings.

I just have one question, and that deals with the cap. What type of cap would you recommend or consider or deem appropriate?

Hon Mr O'Connell: I have not really considered one, but if there is no allowance, as in the case I am describing, for capitalizing that cost and spreading it over, say, 10 years, I would consider a cap that did about the equivalent of a spreading over a number of years. I do not think the cap, if I may say so, is the really important thing. What I object to is the administrative practice that allows extraordinary expenditures never to be removed from the system. Looking for capital gains in a situation that depends on cheating tenants out of their rights and justice is just no good system at all to defend. I am ashamed of the approach to this particular thing by covering it up with capital appreciation. That is disgusting, in my view.

Mr Duignan: Thank you, Mr O'Connell. Your point is well noted.

Mr Mahoney: I wanted to ask about the idea of spreading it over 10 years. From the tenants' point of view -- perhaps even landlords, I do not know -- would it not make more sense to spread that $250,000 cost over 10 years than to ask the landlord in that one building to absorb it in one increase, even if it was taken out after the one year?

Hon Mr O'Connell: It could well be, but that is not permitted in the present act.


Mr Mahoney: I certainly agree with you that to put that $250,000 increase on to the rent rolls and leave it there in perpetuity is not a just situation, but I wonder if your amendment would allow for that. Perhaps it does.

Hon Mr O'Connell: Yes, it does.

Mr Mahoney: I have only just seen it so I have not really had a chance to understand it thoroughly, but it would seem to me that spreading it out over some form of amortization would make more sense than simply allowing them to put it on and then take it off; and that is how I kind of interpret, perhaps incorrectly, your amendment would allow for that extraordinary operating cost, once it ceases to exist, to be removed from the rent calculation. It would seem to me more appropriate to require that it be spread out and perhaps an amendment by the government, if we are finally going to get lucky enough to have it seriously consider one, could be something that would allow that to happen and perhaps could be supported by landlord groups.

Hon Mr O'Connell: I think you make a good point, and if you look at page 12, at the top of the page, paragraph 35c, these are where the Lieutenant Governor in Council can make amendments where a minister or regulation could prescribe "the period of time for which the minister shall consider each of the matters set out" in those clauses, and that includes that he could say in the case of an extraordinary cost of the kind I am describing, five years, or you could say one year. I think it leaves some flexibility there. But if it has been paid off in one year, there is not much point; you see, you pay your legal fees. I do not think you can get a deal where you do not need to go out if they are going to be added into the rent; you get them the first year.

Mr Mahoney: But maybe the reality is that the landlord may have to pay those legal fees in year one but he does not necessarily have to collect them all back in year one.

Hon Mr O'Connell: No, well, that is an option, which I hope is in the act, that gives flexibility.

Ms Poole: Mr O'Connell, thank you for your presentation today. The suggestion and the amendment that you have carried forward actually will fit under the whole umbrella of cost no longer borne by the landlord and what should and should not be passed on to a tenant, so we will certainly be giving it very careful consideration; and thank you for that.

I have one quick question about a different area, while we have you here, because you have obviously got a lot of expertise in this area, that is of capital expenditures generally. If a landlord has incurred major repairs, not minor ones which should be day-to-day maintenance but major repairs or significant capital expenditures, how do you feel they should be fairly dealt with? Do you feel that the landlord should be entitled to be reimbursed for part or all of those capital expenditures?

Hon Mr O'Connell: All of them; yes, I do. I do agree that the landlord should be encouraged to make them constantly over the period of time and not to let ordinary maintenance become capital expenditures. You can see the inducement. There is a potential for exploiting the concept of extraordinary costs. You can neglect and then have an extraordinary cost; in it goes, and you deal with it differently. That is why I say this thing should be thoroughly investigated in the context of being fair to both sides, and I do not like at all the way the government is approaching it.

The Vice-Chair: Thank you, Mr O'Connell. I think the committee would like to commend you on bringing a specific amendment before us, so that when dealing with the legislation it may be helpful.


The Vice-Chair: The next presentation will be made by Richard Saliwonczyk representing Don't Empty Mimico Apartments. Good afternoon, sir. I believe you also have had the opportunity to watch the proceedings for a while and you understand that you will have 10 minutes to make your presentation. Ten minutes will be allowed for questioning by the committee members. Introduce yourself and your position in your group and the name of your group for Hansard purposes.

Mr Saliwonczyk: My name is Richard Saliwonczyk. I live in Etobicoke. I was born in Toronto and I am a member of a group called DEMA, Don't Empty Mimico Apartments. It is a tenants' organization. I would like to thank the Chairman and the members of the committee for giving me an opportunity to speak on behalf of my tenants' organization.

Don't Empty Mimico Apartments, DEMA, is a community organization of working-class tenants living in affordable buildings in southern Etobicoke. One of our main objectives is to preserve the stock of affordable rental apartments in our community. Many of us have been part of the Mimico community for a number of years and have a stake in its future.

The main objectives of DEMA are the retention of affordable rental homes on the Mimico strip and the improvement of property maintenance in the community. We want to convey our strong support for Bill 4, the Residential Rent Regulation Amendment Act, 1990. We congratulate the government on introducing this bill and listening to the concerns of working tenants who need affordable housing in a city where less than 10% of tenants can afford to buy a home.

DEMA is fighting to maintain affordable rental apartments on the Mimico strip on Lake Shore Boulevard. These apartments are particularly vulnerable because they are situated on valuable lakefront lots. Two luxury condominium developments, Marine Del Ray and Grand Harbour, are being built to the east of these apartments. The working-class tenants in these apartments fear that their homes will be demolished or converted into luxury condominiums. Under the Rental Housing Protection Act these apartments are protected from conversion or demolition. The landlord is attempting to circumvent the act by poor maintenance, which reflects instead on the tenants' housekeeping and which can be used as leverage to demolish or convert the buildings to other uses.

As well, property standards are not being enforced by the Etobicoke building department. An example in Mimico is a landlord who owns three low-rise buildings on the lakefront as well as other buildings in the rest of Toronto. There are 219 units in these buildings. This landlord has not carried out any improvements to these buildings over a number of years. It appears that since February 1989 the management of these buildings has been emptying the units through a variety of means and not re-renting them. Representatives of the tenants' association estimate that 50 apartments are now empty. A high proportion of these units are rented to recent immigrants who speak little or no English.

South Etobicoke Community Legal Services, a community legal clinic in the area, estimates that there are 65% Polish, 15% Spanish-speaking and a very few Vietnamese and the remaining are English-speaking. Until recently a large number of these tenants were government-sponsored refugees. We believe that the owner is intending to convert the use of either the land or the buildings to a use other than the provision of affordable rental housing.

In 1988, South Etobicoke Community Legal Services represented the tenants of these buildings in court against this landlord. The tenants applied to court for a rent reduction and an order that the landlord carry out repairs. Three years later the landlord still has not repaired the building and the tenants continue to suffer from substandard living conditions. For example, tenants must live under holes in their ceilings, broken toilets which the landlord refuses to fix, water damage and mould on the walls and ceilings and draughts from windows which make apartments cold and expensive to heat. In addition, the landlord is charging extra rent money for a new stove and fridge, despite the fact that the stove and fridge are included in normal rent.

It is obvious that this landlord does not care about the wellbeing of her tenants or complying with her obligations under the Landlord and Tenant Act to keep the rented premises fit for habitation. Since the landlord is not willing to keep these apartment buildings well maintained, the tenants should be able to buy these buildings in the form of a co-operative, as was done at neighbouring Kilcooley Gardens. This co-operative was created as a result of another landlord who was not willing to maintain apartment buildings fit for habitation.


Another example of a landlord who is taking advantage of tenants is a landlord who owns six buildings in the Islington-Lake Shore area. There are about 240 units in these buildings. Under the current rent review system this landlord has been able to increase the rent over 30% in a two-year period. This landlord carried out renovations such as replacing windows, painting hallways, replacing hall carpets and installing hall light fixtures. No repairs were carried out inside the apartments of the tenants. For this the Ministry of Housing approved him a 12% increase for 1989 and a financial loss and 21.7% rent increase for 1990. He has also applied to rent review for an increase in 1991. The tenants in these buildings now owe $1,000 in rent arrears due to these increases. They are angry because even with these increases the landlord is still not maintaining the apartments in conditions that are fit for habitation. Tenants are forced to buy their own fridge or stove because the landlord will not supply them in their apartments. There are also problems with cockroaches and mice, as well as repair problems in their washrooms and kitchens.

Speaking as a tenant myself, I am a university graduate. I earn $33,000 a year before taxes and I am not able to afford to purchase my first home. Families and single parents have a lesser chance than I do to purchase their first home. An example of this unaffordability is the proposed Daniels condominium project on the Goodyear site in Mimico. I went to the open meeting which the Daniels Corp organized for the community. I learned at this meeting that a one-bedroom apartment would cost between $800 and $900 a month rent, which I and most people cannot afford. Also, their version of affordable home ownership starts at $150,000, which again most people cannot afford. Also, the Daniels Corp has no provisions to prevent speculators from buying these units as vehicles to speculate. The Daniels Corp has not considered the need for more services in an area which will need more services due to the increased population, which will be a result of its project.

I would like to conclude with a quotation from a Toronto resident in Sunday's Sun, 31 July 1988, in an article on the crisis in housing: "I feel as though the city where I lived all of my life is being raped by speculators and developers, aided and abetted by politicians who have totally lost touch with what life is really like for the majority of ordinary people."

I want to state again DEMA's support for Bill 4, which I believe will address many of the injustices I have described which tenants are facing in the Etobicoke area.

The Vice-Chair: Thank you. Your timing was perfect.

Mr Winninger: Mr Saliwonczyk, I would like to commend you on your presentation. I was particularly interested in your reference to the substandard living conditions that you and your fellow tenants are exposed to, to the extent that you have cockroaches and mice, as well as repair problems in the washrooms and kitchens. I would like to ask you how you would feel were standards of maintenance and services more closely tied in with rent increases the landlords justify from year to year?

Mr Saliwonczyk: That is a very good question. If they were tied in, it is something that the landlords should not be able to take advantage of so that they could increase the rent very unreasonably and very uneconomically if they were tied in. For maintenance, my own opinion is, we pay them rent. With that rent money they should be able to maintain the buildings. They are making a profit.

Mr Duignan: Very briefly, thank you for coming today. It demonstrates yet once again the need for Bill 4 and I urge my Tory colleague to come aboard, it is important though, the same as for my Liberal colleagues.

Mr Saliwonczyk: Could I just mention one thing?

The Vice-Chair: Yes.

Mr Saliwonczyk: Alan Redway, the federal Minister of Housing, actually sent David Peterson a letter saying that he was favouring a land speculation tax.

Ms M. Ward: I think you allude to this in the first part. That part of Metropolitan Toronto is a rather hot area right at the moment, is it not, for speculation and redevelopment and so on?

Mr Saliwonczyk: Yes.

Ms M. Ward: So I see the message in here. You describe the tenants applying to a court order for a rent reduction in order that the landlord carry out repairs. Three years later, you say he still had not repaired the building. Had that been processed and passed and did they get the order?

Mr Saliwonczyk: It is still in the process. This is even before the freeze was put on that this particular landlord has done nothing for the last two or three years.

Ms M. Ward: So you have been waiting since 1988 for that.

Mr Saliwonczyk: I am fortunate not to live in this particular building, but I do live in the area. I rent and I am afraid of my future.

Ms Poole: Mr Saliwonczyk, thank you for your presentation to the committee today. You have pointed out several areas where obviously the system has broken down. While your concerns are very valid, what we are trying to find on this committee is a solution which is fair to all sides, that some of the landlords who are giving tenants a lot of problems, such as the one you have described, can be penalized, but while the ones who are what we would call good landlords who are providing good services for their tenants are not penalized unjustly.

May I just ask you about capital expenditures and how you would like to see them dealt with. If a landlord spends money on major repairs and not day-to-day things, but really major things such as putting on a new roof, how do you think this should be dealt with? Who should pay for that?

Mr Saliwonczyk: I think the first question that should be asked is, is the person who is buying the apartment building trying to make a profit out of a necessity of life? We all have to live somewhere. I myself believe in free enterprise, but food, clothing, shelter and transportation are necessary to everyone. If the person or the owner is out to make a profit I do not think he should be trying to pass the bills on to the tenants in order to make that profit. There should be some kind of reasonable formula.

Ms Poole: What about the instances where there is no profit, where the landlord is actually operating at a loss? That roof would still need to be repaired or replaced. In that case, who pays for it?

Mr Saliwonczyk: I think this is something for the owner of the building. As I said before, if they are in business to make money, they should take that into account as an operating expense. You are asking me if the tenants should subsidize the repair for the replacement of the roof. Basically that is what you are asking me here.


Ms Poole: I think everybody is agreed in this room that certain things need to be done to our buildings. When the balconies corrode or the roof needs to be replaced, it has to be done. What we are trying to grapple with is who should pay for it and how it should be paid. I guess one of the difficulties I have with Bill 4 is the fact that it says that under no circumstances can the landlords pass on these kinds of repairs. I suspect in many cases they simply will not get done and many more of our tenants than do today will be living in slums and in conditions which you describe here. Many more, and that is my concern.

Mr Saliwonczyk: I am glad you brought up that point. I am not saying all landlords but some landlords in the past have made very few repairs to their buildings. If the landlords are saying now that they refuse to make any capital costs or major renovations to the buildings, why not let the tenants buy them in the form of a co-operative and let the tenants themselves do whatever repairs they as a group feel are required?

Mr Tilson: Do you think the private sector has any role in the apartment business?

Mr Saliwonczyk: Could you clarify what you mean? In building apartments or what?

Mr Tilson: Everything. Do you think the private sector has any role in the apartment business: ownership, operation, anything?

Mr Saliwonczyk: Yes, I do.

Mr Tilson: Those people in the private sector who are doing that, should they make a profit?

Mr Saliwonczyk: An honest profit, yes.

Mr Tilson: What is an honest profit?

Mr Saliwonczyk: One where renters are not gouged, taken advantage of.

Mr Tilson: How do we do that?

Mr Saliwonczyk: You have to set up rent controls.

Mr Tilson: Do you feel that rent controls will allow for people in private enterprise to make a profit? The government, Mr Rae in particular, prior to this election, at least in that interview with Mr Melling which I am sure you have referred to, has indicated that the government should really own everything. Do you concur with that?

Mr Saliwonczyk: You are sort of asking me on the spot.

Mr Tilson: Yes, I am.

Mr Saliwonczyk: Okay. To a certain extent.

Mr Tilson: To a certain extent you agree with that?

Mr Saliwonczyk: Yes.

Mr Tilson: If that is the case, at what cost? In other words, how far do we go? Will that not result in our taxes increasing?

Mr Saliwonczyk: Not necessarily.

Mr Tilson: How is the government going to take over these buildings and maintain them?

Mr Saliwonczyk: If tenants could form a co-operative and buy these buildings, they would incur the cost themselves. On their boards, they would decide what they would want done as improvements or luxury items or whatever, but they would be deciding among themselves.

Mr Tilson: How do we get to that stage, though, when you have indicated that many tenants simply cannot afford to get into that? They cannot afford the rents that are being charged, so how are they going to buy buildings?

Mr Saliwonczyk: Collectively, they could buy the buildings. From what I understand, there are programs that are supposed to enable groups of tenants to form co-operatives.

Mr Tilson: Yes, there are. Do you think that should be the way our housing stock should go, with all co-operatives?

Mr Saliwonczyk: I would not say all co-operatives, but in a city where less than 10% of the tenants can afford to buy the first home, what other option do I have?

Mr Tilson: Where are these buildings that you are referring to and how many are there?

Mr Saliwonczyk: I do have the information, but I do not know if it is appropriate to give it.

Mr Tilson: Yes, I would like to know where the buildings are and what their addresses are so we have a fair idea as to where they are.

Mr Saliwonczyk: I do have them, but I --

Mr Tilson: Could you give me the addresses?

Mr Saliwonczyk: Over the microphone?

The Vice-Chair: I would caution that perhaps the witness is concerned with what I cautioned witnesses about the other day. He could perhaps provide those to you privately rather than in public.

Mr Tilson: Are we talking one building or 10 buildings or what are we talking about?

Mr Saliwonczyk: Okay. Three buildings in one area.

Mr Tilson: And what is the average rent for those buildings, say, for a two-bedroom apartment?

Mr Saliwonczyk: I am not sure, but for a one-bedroom apartment --

Mr Tilson: All right. Let's try a one-bedroom apartment.

Mr Saliwonczyk: Okay. It is about --

The Vice-Chair: Thank you, Mr Tilson.

Mr Saliwonczyk: All right. Sorry.

Mr Tilson: The beat goes on, Mr Chairman.

The Vice-Chair: Time has expired. Thank you very much for coming before us this afternoon. We appreciated the information you had to provide.

Mr Saliwonczyk: Thank you for giving me this opportunity. I hope there will be some affordable housing in the future.

The Vice-Chair: That is what we are all here for.


The Vice-Chair: The next presenters will be the Bretton Place Tenants' Association, represented by Betty Postill, vice-president. For Hansard purposes, would you identify yourselves and your positions within the organization. Then you have 10 minutes to make a presentation and the committee will talk to you for 10 minutes.

Miss Postill: I will do my best. Good afternoon, Mr Chairman and members of the committee. My name is Betty Postill. I am vice-president of the Bretton Place Tenants' Association. I have lived in the complex for 23 years. I am standing in for our president, Chris Horne, who is unfortunately out of the country on business and unable to attend this hearing. Accompanying me today is Helen Cox, who is a director of our association and has lived at Bretton Place for 25 years.

The Bretton Place complex, located south of St Clair Avenue and east of Yonge Street, is comprised of two buildings, 44 Jackes Avenue and 33 Rosehill Avenue. There are 626 units. These units include bachelor, studio, one-, two- and three-bedroom apartments and penthouse suites.

In 1989, the rents ranged from $450 for a bachelor to $2,200 for a large penthouse, exclusive of hydro and cable TV charges. These figures were taken from an application for whole building review dated 21 November 1989.

The Bretton Place Tenants' Association is an active, ongoing organization which was formed in the fall of 1982 as a result of the concerns of the tenants at the time of the sale and subsequent flip of the Cadillac Fairview buildings, including ours. By choice, we are not a member of the Federation of Metro Tenants' Associations in this city. We are pleased finally to be able to have some input into the legislative process.

We wish to give you a brief outline of how arbitrary legislation by successive provincial governments hurriedly enacted has resulted in a roller-coaster ride for the tenants of Bretton Place. The following are points we would like to bring to your attention.

First, the buildings were sold by Cadillac Fairview and subsequently flipped twice, resulting in the doubling of the market value of the buildings.

Second, the provincial government appointed Clarkson Gordon as the receiver.

Third, we had developed a good working relationship with the receiver, and a proposal for converting our complex to condominiums was developed. At that time, more than 40% of our tenants had been living in the complex for more than 15 years. More than 80% of the tenants had signed an agreement to convert. More than 50% had signed agreements to buy their units.

Fourth, the city council approved our submission. Our units would belong to us and a $2-million contingency fund would surely see to the refurbishing of an aging building. It was built in 1966.

Fifth, the provincial government enacted the Rental Housing Protection Act, preventing all conversions, including ours.

Sixth, subsequently the receiver sold our buildings to Halwood Properties.

Seventh, for the next three years we were faced with substantial rent increases, 33% over three years, to cover financing costs as allowed by legislation. The renovations and refurbishing were on hold.

Eighth, again we developed a good working relationship with our most recent owners. We proceeded in good faith to strike an agreement, incurring some expense, approximately 9%, to begin the needed improvements.

Ninth, once again the provincial government has stepped in and placed a 27-month moratorium on capital expenditures.

Tenth, as a result of this work, the work on our complex has been placed on hold. Apparently our owners have elected to cut their losses and leave things in an incomplete state.


Based on our experiences, we would like to make the following recommendations or suggestions:

1. Some limit to the ability of landlords to pass excessive financing costs on to their tenants is essential.

2. We recognize that the province has a large number of aging buildings in its rental stock. You need to look at creative ways of solving this problem without tenants having to be hit by exorbitant rent increases. Perhaps a contingency fund for major capital expenditures should be a necessary part of each sale involving rental stock.

3. Landlords and tenants in buildings of 30 or more units should be encouraged to work together to come to some kind of mutually agreeable proposal for capital improvements. Where the landlord and a tenant group or a majority of tenants agree to these capital improvements, the rent increase to cover such improvements should not be more than 10% or double the provincial allowable increase, whichever is the lesser.

4. If agreement cannot be reached, then both parties would proceed to binding arbitration.

5. Finally, perhaps you would consider a clause requiring landlords to dedicate a reasonable portion or percentage of their rental income to maintenance, repairs and replacement.

In conclusion, we are concerned about what kind of rent review application we will confront two years down the road. We are strongly in favour of provincial rent controls. However, we are highly cognizant of the importance of landlord-tenant co-operation, which, we must remember, is beneficial to both parties.

We hope that the honourable minister, in consultation with this committee, will incorporate all of these concerns in future legislation. This concludes my remarks, and I thank you again for the opportunity to present the views of the tenants of Bretton Place.

The Vice-Chair: Thank you very much. You do have a few more moments.

Miss Postill: No, thank you. I have said what I have had to say.

The Vice-Chair: Thank you. Then the Liberals will be beginning.

Ms Poole: Thank you very much for your presentation today. I am particularly encouraged by it because you have given us concrete ideas of how we could go about making sure there is a fair system in place.

I wanted to address a couple of things. The first is the retroactive nature of this bill. You and your landlord came to an agreement, I believe, that the capital expenditures would not exceed a certain amount. I believe it was under 10%.

Miss Postill: Yes, it was.

Ms Poole: The landlord proceeded with these capital expenditures and was part way through when word came down that Bill 4 was going to be enacted.

Miss Postill: Yes.

Ms Poole: So right now you are in a state of frozen chaos, where part of the work is done but part of it is not. Do you support the fact that your landlord will not bc able to be reimbursed for any of those capital expenditures that he, she or it incurred?

Miss Postill: No, I am not and I think, as you stated, we are in the middle. We sat down and they gave us a list of all the things that they thought should be done to the building. We sat down and gave them our list and we worked out what we thought was a reasonable number of things to be done, amortized over a number of years, and they agreed not to ask for more than 10%.

They indeed started the plumbing repairs in our buildings. We have two buildings. The larger building is now almost complete and they have just about finished up in that building. They did the main risers in the other building and they have now stopped there and covered up their holes. They have done a very neat job of finishing it up, but they did not finish the plumbing in that building. But they cannot get back their costs and I think they should be allowed to. We started out in good faith. Effectively this is the third time we have come to agreements and than the provincial government has stepped in and changed the rules.

Ms Poole: I can understand your frustration, particularly because you were part of the original problem with the Cadillac Fairview flips that created so much consternation .

Miss Postill: Yes.

Ms Poole: You have certainly had a checkered history.

Miss Postill: Yes. I thought the roller-coaster ride was an apt description.

Ms Poole: With capital expenditures, you have made several suggestions which I think we should definitely look at. I guess your final point was that maybe we should consider a clause requiring landlords to dedicate a reasonable portion or percentage of their rental income to maintenance, repairs and replacement. Do you see this working like a condominium reserve fund, that type of thing, or are you talking about some sort of fund where the tenants would pay a part of it and the landlord would pay a part of it? How do you see that working? I can appreciate that you do not have all the details and you are just floating some ideas around.

Miss Postill: We only heard we had this opportunity last Thursday. I think we did mention earlier that there should be a contingency fund for major capital expenditures when a building is being purchased. That does not help owners like ours, who have already purchased ours under existing legislation figuring they could get them back.

Ms Poole: So you are specific in talking about the point of sale.

The Vice-Chair: Thank you, Ms Poole.

Ms Poole: Thank you for your presentation. That was very helpful.

Mr Tilson: One of the questions our party is concerned with, and it appears you are as well, is the issue of retroactivity. Is it fair? I believe you are saying it is not fair. It appears to be in favour of the tenants, but it may not be as time goes on. At first blush it appears to be, but if work is not done or if it causes financial difficulties to landlords standard maintenance may not get done; that is the way I get it. The whole issue of retroactivity, which hopefully more and more tenants and landlord groups are agreeing on, is that one issue. There is the reliance and confidence the public has in a government when rules are changed. When you go along in a certain way, you rely on that; this could apply to tenants as well. Do you have any further thoughts on that?

Miss Postill: I was just thinking of an analogy while you were speaking. I teach school, I have been teaching for 32 years, and this legislation reminded me of myself. When I am worried about losing control of the situation, I crack down on the whole class and then step back and say: "Excuse me. I've made an error here. I have no business penalizing the whole group for the errors of a few or indeed even for myself." So I have to backtrack. I got the very strong feeling when this legislation was enacted: "Whoops, something is out of whack so we're going to penalize the whole group." I felt like I had been penalized. I am speaking as an individual, not necessarily as the vice-resident of Bretton Place, but I know there are others who feel the same way.

As far as these capital costs are concerned, another personal opinion, if I may step aside from my position, is that when you refurbish a building and improve its quality, you then would expect that if you were coming from outside you would pay more to live in that building. When I moved in, it was considered one of the better buildings and I could not afford the rent; my parents had to help me to pay. There were less expensive buildings down the road, but it did not offer what this building offered. Does that answer your question?

Mr Tilson: Yes, it does. I think that gets to a further question about quality of living. You were starting to get into that. I do not know whether you have read Bill 4 or at least a synopsis of it. Looking specifically at Bill 4, which, as the minister has indicated, is moratorium legislation which goes for a two-year period of time, does it help existing tenants? Does it help future tenants? In other words, does it help the quality of life of present and future tenants?

Miss Postill: One of the things we are very worried about is that because our landlord went out and made these loans -- I do not know on what basis he got the loans, but I have to assume that the banks took into consideration that he would be able to have those costs passed through and they would have no problem collecting. He is now forced to carry those loans for the duration: 27 months. Are those costs going to then be passed on to us as well as the capital expenditures down the road? If so, that worries the heck out of me, because not only are we going to be carrying some or an equitable amount of the costs for these renovations but we are also going to be paying for the carrying charges for a 27-month wait before we do it.


Mr Winninger: I certainly agree with you in principle that agreements between tenants and landlords for capital improvements are generally desirable. Did you ask your landlord in this particular case, Halwood Properties, why after three years and a 33% increase in the rent it could not afford to carry out necessary plumbing repairs to your complex without increasing the rent by 9% beyond the guideline?

Miss Postill: First, I think we need to clarify the word "necessary." Where there were leaks or problems with the plumbing, they were repaired and have been all along. This was in order to redo all of the galvanized piping and reduce the gauge of the pipe, etc, so we had an efficient system that was not having leaking problems.

As far as those three years were concerned, under the legislation I understand he was allowed to collect those costs for his hardship. It was the receiver who sold him the building so it was the provincial government that allowed him to buy it at whatever down payment he used and whatever carrying charges he had.

Mr Winninger: Have those financial hardship costs allowed to the landlord ever been taken away from the rent as cost no longer borne?

Miss Postill: No.

Mr Winninger: Does that strike you as fair to the tenants, if financial hardship declines that that cost is still built into your rent?

Miss Postill: There are two answers to that. Again I must speak as an individual. On some levels, yes, but on other levels, when I look around at the apartments in the area that are brand-new, I am still paying way less than what they are paying.

The Vice-Chair: Thank you very much for appearing before the committee today. Members of the committee will know that this completes the work for today.

I believe the clerk has distributed to all members a folder with the travel information in it. As you know, we will be leaving Queen's Park tomorrow after the hearings to go to London. There will be hearings in London on Wednesday and in Windsor on Thursday.

Mr Duignan: I understand that the bus is leaving around 6 o'clock tomorrow.

The Vice-Chair: That is my understanding.

Mr Duignan: I wonder if that could be put back to 6:30 or 7, because we have a caucus meeting tomorrow and I understand there may be some sort of briefing to the members of the committee, who will not be at that caucus, right after these proceedings end tomorrow. They are not scheduled to end until some time around 5:40, but as we are always running late that could be 6 o'clock, so we may need some extra time.

The Vice-Chair: I suspect there will be some flexibility there. We can perhaps work that out as we go along, provided it does not throw the entire schedule off.

Mr Tilson: On a point of order, for you as Vice-Chair and Mr Mancini as Chair to consider: It is a general question which applies to everyone, I suppose. Two speakers ago, I think you suggested that perhaps they not give their address. I do not understand the rationale for that. If people are prepared to come, I believe I am entitled, as a member of this committee, to know where they are and what problems that particular building is having. I see nothing wrong with that.

The Vice-Chair: The witness was showing much reluctance in answering your particular question. As you know, witnesses before this committee are not protected by the immunity that we as parliamentarians have. Therefore, if a witness says he is reluctant to divulge certain information, I do not think it behooves this committee to try to extract that information in public and perhaps cause the witness some legal difficulty. I am not saying that would have happened, but I think we have to be careful that we protect the rights of the people before the committee.

Mr Tilson: If the Chair feels I am badgering a witness, I think it would not be improper for you to interrupt me. But unless the witness makes that statement -- that witness may have implied it but did not make that statement -- I still think it is useful for me to know, because I have a line of questioning I would like to ask specific applicants, where they are and other questions like it. Once you stop on that question, I cannot ask those other questions.

The Vice-Chair: Your point is well taken. The committee is adjourned until tomorrow morning at 10 o'clock.

The committee adjourned at 1725.