Wednesday 22 January 1992

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


Chair / Président(e): Brown, Michael A. (Algoma-Manitoulin L)

Vice-Chair / Vice-Président(e): McClelland, Carman (Brampton North/-Nord L)

Abel, Donald (Wentworth North/-Nord ND)

Bisson, Gilles (Cochrane South/-Sud ND)

Harrington, Margaret H. (Niagara Falls ND)

Mammoliti, George (Yorkview ND)

Marchese, Rosario (Fort York ND)

Marland, Margaret (Mississauga South/-Sud PC)

O'Neill, Yvonne (Ottawa-Rideau L)

Poole, Dianne (Eglinton L)

Turnbull, David (York Mills PC)

Winninger, David (London South/-Sud NDP)

Substitution(s) / Membre(s) remplaçant(s):

Callahan, Robert V. (Brampton South/-Sud L) for Mrs Y. O'Neill

Frankford, Robert (Scarborough East/-Est ND) for Mr Marchese

Jackson, Cameron (Burlington South/-Sud PC) for Mr Turnbull

Morin, Gilles E. (Carleton East/-Est L) for Mr McClelland

Owens, Stephen (Scarborough Centre/-Centre ND) for Mr Bisson

White, Drummond (Durham Centre/-Centre ND) for Mr Winninger

Clerk / Greffier: Deller, Deborah

Staff / Personnel:

Baldwin, Elizabeth, Legislative Counsel

Joyal, Lisa, Legislative Counsel

The committee met at 1014 in committee room 1.


Resuming consideration of Bill 121, An Act to revise the Law related to Residential Rent Regulation / Projet de loi 121, Loi révisant les lois relatives à la réglementation des loyers d'habitation.

The Chair: The committee on general government will come to order. We were discussing at the recess yesterday subsection 21(3); Mrs Poole had the floor, according to my notes.


The Chair: This is interesting. I understood that was for public hearings, but if it is for clause-by-clause, then --

Mrs Marland: I was not here for the public hearings; I only started here when we started to discuss the clause-by-clause. It is just that if I am the only person here for our caucus -- and sometimes because I am somewhere else it is impossible. We had this agreement that even if the minister were late, as long as the staff was here --

The Chair: If that is what was agreed. The only reason the Chair has not been proceeding is because we wanted to make sure all parties had an opportunity to comment on all sections.

Mrs Marland: I am sure I recall that correctly. I do not have any difficulty with that at all. Sometimes it is impossible to be in two places when there is one of me. I think we did discuss it at the beginning because we realized there might be times. Do you recall that?

The Chair: The committee very much appreciates that, Mrs Marland. We understand your difficulty and we understand that you are being very gracious in allowing us to start.

Ms Poole: In discussing subsection 21(3) yesterday, both Mr Jackson and I touched on one of the problems which related to the fact that if the maximum rent changes it might be very difficult in the financing area as financing companies require that level of stability. I foresee another problem. Maybe it is not a problem, but I would like to ask if perhaps Ms Parrish could comment on what I see as a problem.

I will give you a scenario where a landlord has withdrawn services. We will not touch the inadequate maintenance or neglect section because that is very subjective. Let's take an example where there has been a withdrawal of services. Let's say the landlord expands the laundry room and therefore part of the locker room, where there have lockers for tenants to keep things, is out of service. It cannot be used because it has been put into the renovation. The tenants naturally would apply for a rent decrease because there has been a withdrawal of service. Let's say the rent review officer said this is worth $20 a month and we will lower the maximum rent by that amount. If at a future date the landlord does increase that service or provide that service again, is there a mechanism in the legislation for the landlord to have the maximum rent brought up to the original level?

Ms Parrish: First of all, there is a rule that deals with temporary withdrawal of services. We may have a situation where, because they are doing renovations in the laundry room, they have temporarily put the washing machines in the locker area and then afterwards they put them all back. There is a rule that when you consider a temporary service withdrawal you consider whether it was withdrawn for some reasonable time. If the lockers were out of service for three months while they were renovating the laundry room, and then the lockers were given back to everybody, that is probably not a service withdrawal and there are later provisions that deal with that.

Let us assume a different scenario. First of all, there would not be a service withdrawal to begin with. The landlord clearly decides to take away the lockers and there is no debate about whether there is an intention to do it only while renovating. It is for ever -- at that time. Three years later the landlord says: "Gee, I'd like to provide lockers." There is no provision to have a rent increase associated with that. If it was an en suite service the tenants could consent to that as an additional service or an additional en suite renovation, but if it was in the common areas there is no provision, unless the landlord can demonstrate that it passes the necessary test, which does not seem likely in the case of lockers.


Ms Poole: I would be much more comfortable with this particular section if it fairly dealt with this situation. One of my concerns with it is that once the maximum rent is lowered there should be, in all fairness, a mechanism to put the maximum rent back to its original level if the particular service, or for instance the area of neglect, has been rectified. Would the ministry consider putting such a mechanism into the legislation?

Ms Harrington: First, I should note that you have drawn up a scenario of that situation, but I would imagine that type of scenario would be fairly rare.

Ms Poole: Perhaps, Ms Harrington, I could help you by drawing another scenario. We will go into those nebulous areas of neglect and inadequate maintenance. Let's say the rent review officer determines that there has been neglect and therefore there will be a reduction in the rent that will affect the maximum rent. If the landlord then rectifies the area of neglect and brings it up to standard, is there a mechanism whereby that landlord can have the maximum rent restored to its original state?

Ms Harrington: I think we can clarify that for you. Ms Parrish.

Ms Parrish: It is important to clarify that you cannot have your rent reduced as a result of neglect. Maximum legal rent cannot be reduced as a result of neglect. The request the landlord has made for an above-guideline increase for capital will be denied in whole or in part, so you cannot reduce your legal maximum rent by that. All you can do is lose your right to increase your rent above guideline.

Ms Poole: That is an important clarification.

Ms Parrish: I think what you are talking about is a case of inadequate maintenance or service withdrawal. Those are the grounds on which you can end up having your maximum legal rent decreased. All neglect can do is affect how much more above guideline the landlord can get. That is actually fairly similar to the current system where a landlord can make an application under Bill 51. They could make an application; the tenants prove ongoing and deliberate neglect in the two cases that have ever been proved and the landlord is denied the above-guideline increase, but their rent does not decrease.

Ms Poole: This clarification was not made yesterday when we were talking about the maximum rent, and I think Mr Jackson was talking about his concern about maximum rent being lowered.

Ms Parrish: Yes, I noted he made that comment but I did not have the opportunity to explain it.

Ms Poole: In which cases, other than withdrawal of services, could a maximum rent be lowered?

Ms Parrish: Inadequate maintenance.

Ms Poole: Inadequate maintenance, which is not defined in the legislation and which is at the discretion of a rent review officer.

Ms Parrish: All decisions in the statute are made by rent officers, and they all exercise discretion because it is a Statutory Powers Procedure Act hearing and that is what the Statutory Powers Procedure Act provides.

Ms Poole: Perhaps we could clarify it to start with. It is my understanding that the Statutory Powers Procedure Act would only apply if there were hearings and not if there were administrative review. This legislation defaults to administrative review unless within 30 days -- I think that is your new and improved timetable -- a tenant or a landlord applies to have a hearing. So when we are talking about statutory powers and that particular act it is my understanding -- and I certainly stand to be corrected if I am wrong -- that it would apply to the hearings but not the administrative review.

Ms Harrington: Could we clarify that?

Ms Parrish: There are three ways you can end up in a hearing: at the request of the tenant; at the request of the landlord; or direction from the chief rent officer, who may direct a hearing notwithstanding that nobody has asked for it when he believes the issues are such that they should be tried in a forum in which evidence can be tested in a certain way.

So if nobody wants a hearing, which may be the case for simple rebates or simple fuel bill increases, for example, then there is no hearing. But if anybody at all wants a hearing or if there is a good reason to have a hearing, it would be held under the Statutory Powers Procedure Act.

Ms Poole: But not if there is administrative review.

Ms Parrish: If there is administrative review, there is no hearing because nobody has asked for it.

Ms Poole: I would correct one thing that you said, in technical wording. You said it means nobody wants a hearing. I do not think that is accurate. What the terminology should have been is that "nobody has applied for a hearing," which might be an entirely different matter. This is one reason tenant groups have asked that there be an automatic hearing instead of administrative review, and it is one reason most people, particularly in light of the fact that this government has deemed it appropriate to virtually remove the right of appeal -- except in very exceptional circumstances there is an appeal to the courts on a matter of law only, so facts could not be contested in that way -- many people feel it should default to a hearing. But we are in a situation right now where it automatically defaults to administrative review unless there is an application within 30 days. That, of course, assumes that tenant associations would have the resources to make that application and, in many cases, acknowledge it, even if it is right on the form. In some cases where tenants have never been to rent review, they would not even understand the process and what it means, so there is concern that the Statutory Powers Procedure Act would not necessarily be applicable in these scenarios.

Ms Harrington: My assistant was mentioning that in terms of the procedures we are talking about, administrative review and hearings, we will have ample opportunity to discuss this during other parts of this legislation.

Ms Poole: Well, Mr Chair, I am quite reassured to hear that the parliamentary assistant intends to discuss those particular areas, but meanwhile, we are dealing with subsection 21(3), which would certainly have ramifications whether it was a hearing or an administrative review.

The bottom line is that the ministry is now telling me that a maximum rent can be lowered without any recourse for the landlord, after the problem has been rectified, to revert to the original maximum rent, and I do not think that is fair. I certainly think it is a flaw in the legislation, and perhaps one that had not been brought to your attention before. Certainly, if you are talking something fairly specific like withdrawal of services, it is much easier for a rent officer to determine what withdrawal of services is. If the tenant had it before and does not have it now, it is a relatively clear-cut case.

Inadequate maintenance is very discretionary. I certainly understand, Ms Parrish, when you say the rent officer has discretion with any part of the act that is being administered, but certainly you must agree that some areas are far more discretionary than others, particularly if in some areas they are quite rigidly bound by the law and in others there are criteria set or guidelines under which they act.

In this particular case, when you are talking about "inadequate maintenance," the ministry has refused to define it. The ministry has refused even to give us broad parameters. The ministry has refused even to give us criteria for what "inadequate maintenance" is. You are willing, at the discretion of a rent officer, to allow them, with no right of appeal other than in very extenuating circumstances, to make a decision lowering the maximum rent, and then you are saying that even if the problem is rectified, the ministry is unwilling to provide a mechanism to bring the maximum rent up to where it was before. Can you, I say through you, Mr Chair, to the ministry representatives, tell me you think that is fair.


Ms Harrington: I would like to say that we have gone through some of the situations we are talking about here and we do believe that what we have put forward is what we want, that is, that the rent officer may order maximum rent less than the previous maximum rent.

Ms Poole: In perpetuity.

Ms Harrington: That is correct.

Ms Poole: Without any recourse, in all fairness, to change it back if the situation has been remedied. I think it is absolutely outrageous. It is condemning somebody to a life sentence. It is basically saying that in a situation where there is a problem and the landlord, in the opinion of one person, this rent officer, has committed a "crime," then if that landlord redeems himself or herself, becomes a model landlord and shapes up or ships out and clean up his act, you are saying: "Well, that's too bad. I'm glad you've repented, but it's not going to do you any good."

What kind of incentive is there in this particular situation for that landlord to shape up or ship out? They have basically been told, "Whether you remedied the situation or not, you're not going to get your maximum rent back." I think it is absurd.

I know you have sections in the act to act as penalties. You have a bigger stick to bring in. But surely you do not accept that in a situation which has been remedied there should be no legal recourse for the person who has been deemed to be the perpetrator to find relief. I cannot believe that in a democratic country like we have in Canada, you are really going to say that you believe this is fair.

Ms Harrington: Well, maybe the landlord would think about that a little bit ahead of time and realize that the tenants do have some power now under this legislation. Also, my staff person would like to comment on your last comment.

Ms Parrish: I would like to talk a little bit about remedy, because I think it is important to understand that there is more than one remedy that can be exercised by the rent officer.

Certainly if this is a case in which the landlord feels very concerned or very worried, I think it is quite likely he will ask for a hearing. Therefore, there will be a hearing whether the tenants want it or not.

It is possible for the rent officer to reduce maximum legal rent or not. They can reduce actual rent or not. They can reduce it for a temporary period and then it can go back up again. There are a number of possibilities.

If you have a situation where there is inadequate maintenance, and by the time the tenant and the landlord get to the hearing the landlord has shown that he has remedied the problem and so on, then the rent officer could affect the actual rent for a temporary period.

If, however, you have a situation where the landlord has had a long history of inadequate maintenance and you get to the hearing and nothing has ever been remedied, then at some stage I think you do have to say, look, we have to affect the actual maximum legal rent. It is not as if you are going to be dealing with a one-week period in which the superintendent was ill and did not sweep the hallways. You are going to be dealing with a sustained and lengthy period of inadequate maintenance. So there is some variability in the remedies.

I should also point out -- I know this answer has not been satisfactory to you in the past, Ms Poole, but I would just comment that the ministry has indicated that it is not currently its intention to define the word "neglect" or the words "inadequate maintenance." We have, however, indicated that in the case of inadequate maintenance we are considering interpretative rules that can be prescribed by regulation, that will direct rent officers to consider certain factors. Those are not definitions, because I do not think you can define what this is. What you can do is look at factors to be considered in determining whether or not there is inadequate maintenance, and those are things we are considering in the course of developing regulations. The regulation-making authorities exist. We are planning to have a public consultation on those regulation-making authorities.

I recognize that having interpretative rules by regulation is not what you want. Everybody wants everything in the statute, but the current Bill 51 has interpretative rules by regulation and we have carried that forward into the current system.

I just wanted to clarify that matter because I think there has been some confusion about the difference between interpretative rules and definitions, and between neglect and inadequate maintenance. So I am not trying to argue; I am just trying to clarify what that position is.

Ms Poole: I thank Ms Parrish for that point she has just raised. Contrary to what you believe I would be dissatisfied with, I was having difficulty when I raised this matter with the minister in getting the minister to say there would be any interpretative rules or criteria or anything, even in the regulations. At one stage I said to her very clearly that my first preference is always to have it in legislation, because then it cannot be changed by arbitrary whim, but even if it was in the regulations so that tenants and landlords would be able to really have a clear idea before they prepared their case for rent review of what the criteria were, this would go a long way to satisfying me.

By the way, I do not see a lot of difference between interpretative rules and criteria. It is just a matter of terminology, I think, what Ms Parrish was talking about and what I was talking about. I am very pleased to hear that the ministry is considering this, and I would be even more pleased to have the ministry verify that this is indeed going to happen. I think it would make a lot of people much more comfortable, rather than to leave so much broad discretion to the rent review officer -- and the rent officer does have a lot of discretion. Wherever that can be not necessarily limited, but certainly guided by legislation or by prescribed rules, I would be very pleased to see that happen.

But when all is said and done, the bottom line is that even if you have interpretative rules in the regulations, you still do not have a remedy for a malefactor who has cleaned up his or her act and is now providing good service and reasonable accommodation to the tenant. I think if you want an incentive -- because it has to be a carrot and stick. Notwithstanding what the ministry has said in this legislation, you are going to get far more results if you do a combination of that. You offer them a way out. What you are doing by denying a remedy after the fact is to say, "Once you have made a mistake, then you're out."

Ms Harrington: I would not characterize it as making a mistake. There is much more involved.

Ms Poole: I would challenge Ms Harrington on it, because we have situations where a building has been sold. I would presume that you are not going to limit it to inadequate maintenance by the current owner. Under Bill 51, tenants saw this is a real drawback, the fact that if the building changed hands, the argument for neglect went out the window because it would have to be neglect by the current owner, and in many cases the building had changed hands.

Mrs Marland: What is the answer to that point?


Ms Parrish: Ms Poole is quite right. The neglect does not have to be the neglect of the current owner. It is for exactly the reason she said, that you could sort of eliminate neglect by just flipping your buildings, and that would be a bad incentive.

Ms Poole: I have the highest regard for Ms Parrish. I think very highly of her and of her abilities, but I am most distressed when I hear her use this word "flipping." There are cases where it is a legitimate sale: It is not a non-arm's-length transaction; it is not from one numbered company to another numbered company held by the same family. They are legitimate sales.

If the original landlord did not take proper care of the building and you have a new landlord who goes in and says, "I'm going to improve this and I have enough money to do this this year and enough money to do this next year," and has a plan, you are telling me that this legislation could affect the new landlord, that what the previous landlord did would come back to haunt the new landlord.

One might say that is fair enough because on the one hand the new landlord probably got the building at a better rate because it was run-down, although anybody who would say that shows a bit of a lack of understanding of the rental housing market. Buildings are sold on the revenues from their rents, and the state of the building actually has a much lesser effect than what the actual revenues are on the sale price. Still, I have a lot of sympathy for tenants who have to put up with years of neglect, and then a new landlord comes in and has to do repairs because of that neglect, and then the tenants have to pay the price.

What I am saying is you have a scenario here where you are going to give the rent officer the ability to lower that maximum rent and even though it is now a new landlord, a good landlord who is working at bringing the building up to standard and changing things, you are going to say that new landlord can never bring the maximum rents up to what they originally were at the time he or she bought the building. I just cannot comprehend how you can think it is fair not to provide a remedy. That is what it comes down to. If there is a remedy, then everything else is fair ball, but if the rent officer is going to make these kinds of arbitrary decisions which cannot be reversed no matter what happens, which cannot be appealed, it just seems to me that something is wrong in this world when that type of thing is happening.

You are lucky, because my voice is about to give out, so I am going to give up and let some other member have a turn.

The Chair: Before Mrs Marland commences, I would like to inform the committee that at about 11:15 we are going to have a delegation from Korea visiting the committee, and I will recognize them at that time. We do have a little bit of background that we will distribute to members so that they can find out who is visiting.

Mrs Marland: Are they landlords or tenants?

The Chair: It does not say in the background information.

Mr Callahan: They are visitors.

Mrs Marland: If they are landlords or tenants, they are going to think they have arrived in Russia.

Mr Callahan: Russia does not exist any more.

The Chair: I am sorry I mentioned it.

Ms Poole: On a point of order, Mr Chair: Sometimes on this committee there has been some acrimony. Perhaps, in view of the fact that we have international visitors, it might be incumbent upon us at 11:15 to behave, for a change, as parliamentarians, rather than let our true natures come out.

The Chair: Thank you for the advice, Ms Poole, but I think they are here to discover how the parliamentary process in legislative committee works --

Mr Callahan: I hope they were not here last night.

The Chair: -- so I would not want us to contrive our behaviour to give them a false sense of what goes on.

Mrs Marland: Mr Chairman, I think that before the delegation arrives we should decide which fairy story Mr Mammoliti is going to recite for them. I think the Three Little Pigs or Robin Hood. Do you have another one we could give them this morning, George?

Mr Abel: I like the Three Little Pigs myself.

The Chair: Mrs Marland, could we speak to subsection 21(3)?

Mrs Marland: Yes.

Ms Poole: Why have we not heard about the big bad wolf yet? I have been waiting for it.

Mr Callahan: I think we have driven Hansard crazy.

The Chair: Order. On subsection 21(3), Mrs Marland.

Mrs Marland: Thank you, Mr Chairman, for giving me the floor.

Mr Callahan: He could have given you worse than that.

Mr Mammoliti: Maybe the Bugs Bunny/Road Runner Hour.

Mr Abel: See, you got him going.

Mrs Marland: You choose it, Mr Mammoliti, that is fine.

Mr Chairman, it is very difficult to sit here and listen to the answers that both the parliamentary assistant and Ms Parrish are giving to the questions from the Liberal opposition critic for Housing, the member for Eglinton, Ms Poole. I think that a lot of the questions she has asked were the questions that I was going to ask, and when I hear the answers I just cannot believe it.

I am sorry if a little of this is going to be repetitive, because I am wondering if there is some other way that either the parliamentary assistant or the staff are able to explain how they can possibly believe that in the 1990s in Ontario we can pass this kind of legislation. We can use words to describe this legislation like "draconian" and "regressive." You can use whatever you want, but basically this kind of legislation, and particularly this individual clause, is totally unjust.

If there was some access to appeal the rent officer's decision, then I think even that would open the door to at least some justice, because you cannot order anybody to do anything in this province without a right of appeal. Here we are saying that, "The rent officer may order maximum rent in an amount that is less than the previous maximum rent." Why do we not even say it the way it is intended? Why do we not just say, "The rent officer may order a reduction in rent"? Why do we even use this ridiculous phraseology? Why does it not say, "The rent officer may order a reduction in rent"? What is wrong with putting it that way so at least the poor souls who are already going to have to spend thousands of dollars, as I said last week, for lawyers to interpret this act might be able to read one of the most pertinent sections of this bill a little more simply? Why can you not put it that way?

Ms Harrington: That would be okay with me. It seems fairly straightforward, what is written there.

Ms Parrish: I guess I want to start out with sympathizing that the concept of "maximum legal rent" is a difficult concept. The reason we specify that it is maximum legal rent is because the landlord may be charging a rent which is less than the maximum legal rent.

Mrs Marland: Excuse me. It does not say "maximum legal rent" in here. It says "maximum rent."

Ms Parrish: Yes, you are quite right. Maximum rent is the legal rent that the landlord is allowed to charge, but the landlord may not be charging maximum rent; he may be charging actual rent, which is less. If you said just "rent," then people would say, "Does that mean the actual rent which the landlord was charging, or is that the legal amount that he could have charged, which is the maximum rent?" This is trying to clarify that it is the maximum rent that could be affected.


Mrs Marland: I wish I had not asked. It gets worse. All right, how do you establish whether the landlord is not charging the legitimate previous maximum rent, that he is charging something less than that? Maybe there has not been an evaluation of his building and maybe all the individual units have different maximum rents potentially. How do you establish what the previous maximum rent could have been?

Ms Parrish: There are several ways that could be established. One is on the basis of the previous order and, if there is a previous order, we do not go behind it. We accept the order, that that is the previous maximum rent.

Mrs Marland: Right.

Ms Parrish: The landlord may also have registered his rents, and if he has registered his rents, and there has been no intervening order, we simply add the statutory guideline in each case, which is the maximum which the landlord could take. So, if we had an order in the past that said the legal rent is $500, and if three years pass, we would take $500 and we would add the statutory increase which the landlord is entitled to take.

So, they may have an order; they may have registered their rent. If neither has happened, then there is a process of what is called base rent validation in which the landlord says, "These are my rents and this is what I am charging," or, "This is my maximum rent and this is what I say." Then the tenants, if they are of a different opinion, will dispute it and that will be decided at the hearing.

Mrs Marland: What kind of hearing?

Ms Parrish: The hearing which the landlord or the tenant has requested. If no one has requested a hearing, then there would be a base rent validation done by the rent officer. If the landlord anticipated that there was going to be a lot of dispute about what his base rent was, he would probably be asking for a hearing. Otherwise, if no one disputes what your base rent is, then we assume that your base rent must be what you say it is and then we establish the maximum legal rent and do the calculation from that time.

As we move through the process of registering more and more rents, there will be more and more rents that are established through a process of registration. Most of the large buildings in the province, for example, are registered now.

Mrs Marland: When you say most of the large buildings are registered now, am I correct in the figure that I have been using, that perhaps out of 150,000 landlords only 11,000 are buildings of more than seven units?

Ms Parrish: I do not know, Mrs Marland. I can undertake to find that out.

Mrs Marland: Okay, I would appreciate having that confirmed or denied.

Ms Parrish: You want to know the total number of landlords and the total number of landlords who are landlords of seven and up buildings?

Mrs Marland: Yes, please, because you just said that most of the large buildings now have the rent registry established for them, and I am wondering what that represents of total rental units in the province.

Ms Parrish: Of total rental units, it represents about half, I believe.

Mrs Marland: So about half may be under rent registry now. Just a ballpark, about half might be under rent registry.

Ms Parrish: Yes. Seven and up buildings were required to be registered under Bill 51.

Mrs Marland: Right, which probably follows through with what I have been saying about the small landlords then, because if we say, to use the minister's figures -- I have not got the ministry figures here this morning, but I know the minister has said about 40,000 people live in rental accommodation. No, pardon me, 40% of the Ontario population lives in rental accommodation. Then what what we are saying here is 40% might be four million people. Since we know what the rents are for two million people, this means we have got two million people left today for whom we do not know what the maximum rent might be if there is no previous order or no registration of those rents through a rent registry.

So subsection 21(3) is a bit of a pig in a poke, is it not, until the registry is up and running, if there has been no previous order and the rent registry is not applying to those units. When you say that if there is a discussion or a dispute on what the maximum rent is then it can go to a hearing, what kind of hearing are you referring to?

Ms Harrington: The same hearing process we have been describing throughout the legislation.

Mrs Marland: Which is what?

Ms Harrington: Ms Parrish, would you like to give her some details?

Ms Parrish: This is just one issue that would be resolved like any other issue. A hearing would be before the rent officer, which is the system that is established pursuant to the Statutory Powers Procedure Act, and in addition, this bill has, in later sections, a series of procedures and procedural rules that are in addition to those set out in the Statutory Powers Procedure Act.

Mrs Marland: Let me be very clear. If there is a debate, subsection 21(3) says the rent officer shall make an order. Then you are going to have a dispute between the rent officer and the property owner possibly, and then it is referred to a hearing, is what Ms Parrish said. Surely to goodness you are not saying that hearing is conducted by the same rent officer who has issued the order?

Ms Parrish: The rent officer has a hearing and he decides. The landlord is coming to the hearing and saying, "I want to increase my rent above guideline to pay for this capital repair." The first question the rent officer has to --

Mrs Marland: Excuse me, I do not want to interrupt you, but I am only dealing with subsection 21(3), which is dealing with a decrease, so we are not dealing with guidelines here.

Ms Parrish: But the landlord only got to this because he asked for this hearing to increase his rent. There are later provisions that deal with tenant-only applications, but you have to have gotten to this hearing because the landlord initially asked for an increase. That is how the landlord got there. At that time, the landlord says: "My current rent is X. I want to add the guideline, plus 3%," let's say. At that time, the tenants may say, "Well, the landlord wants to have all of these capital increases and he may be able to justify them, but we, the tenants, also point out that he has withdrawn services within the last year and we want a reduction for that." So that is how the landlord got to this situation.

The first dispute the landlords and the tenants might have at this hearing would be about whether the rent the landlord was currently charging was legally justified. So the first issue you have to decide is what is the rent now? The second issue is how much more can you increase it? It would be the same rent officer who would decide everything. What is the rent now? How much can the landlord increase it? What can he justify? He justifies blah, blah, blah, and then the rent officer hears from the tenants and they talk about their laundry room that is gone, or whatever, and they make all the adjustments in one hearing.


Mrs Marland: What about the landlord who is not applying for a hearing because he is not applying for an above-guideline increase? The landlord is just going to go along with whatever the legal increase is for that given year. So there is no hearing. Can the tenant then ask for the decrease and that generates a hearing?

Ms Parrish: Yes, the tenants can make their own application.

Mrs Marland: In your response to Ms Poole, you said that the decrease, once it is granted, for whatever reason, is there for ever. That then becomes the maximum rent.

Ms Parrish: Yes, they can subsequently increase based on guideline or based on a new application if they can meet the test from the statutes.

Ms Harrington: Maybe I could clarify that. Obviously, the rent is going to be reduced because of the state of that building, and that is the right we are giving this rent officer, to make that decision. The state of that building is what we are talking about.

Now, if the building is sold or improved, then the amount spent on the building can be put through. If there are large amounts spent or necessary capital repairs, the rent can be increased in the usual way, which is the 3% above-guideline. That is the way a building, if it is improved, can have the rents raised. That is the way the system works.

Mrs Marland: So if the rent is $500 a month and this poor soul gets the rent reduced to $400 a month based on the fact that an elevator is out of service for six months, are you really saying that this $400 a month then becomes the maximum rent, no matter when that elevator comes back in service? Is that what you are really saying?

Ms Harrington: I am not making those judgements, no. That is up to the rent officer to look at. He listens to the landlord, who brings forward evidence. There is a process. We are only giving him the ability to do that.

Mrs Marland: I know. You are giving the ability to this person we do not even know about yet, what training they are going to have or what qualifications they need to get the job in the first place. It is such an incredible copout to have this legislation say, "Well that is going to be up to the rent officer." Although I have asked this question repeatedly, I am going to have to wait until we get down to section 116 to find out who that person is and what his qualifications are.

But let me just say this: when the rent officer has made the decision that this rent is now $400 a month instead of $500 -- I am not getting into how is he going to do it, because even you do not know how he is going to do it, which is the most ludicrous part, and it is indefensible for a government to be doing what it is doing.

Ms Harrington: Mrs Marland, if what you are saying --

Mrs Marland: No. Let me just give you the example again. The rent officer has made a decision that this rent is now going to be $400 a month, for whatever reason; I just gave an example that maybe the elevator is out of service for six months. I know that in a home for the aged in my riding -- it is not private sector, before you start thinking it is some cheap so-and-so who has neglected it, as the attitude of this socialist government is about anybody in the private sector. An elevator part had to come from Europe. It could not be flown; it had to come by ship.

Ms Harrington: I heard that.

Mrs Marland: That happened to be in a public sector home for the aged. It is quite possible that an elevator in a privately owned apartment building might be in the same situation. So instead of two elevators, they have one. As I say, it is not an example I am pulling out of the air, it is fact. But in any case, this omnipotent rent officer can make all of these decisions without any appeal by the poor individual who has to accept his judgement and his decision. We do not even know if he is capable of making that judgement.

So the rent gets reduced to $400 a month and, to use Ms Parrish's term, the legal maximum rent is now $400 a month. I want to be very clear that what you are saying is that this is then the legal maximum rent for ever, and that the only way this landlord can increase the rent again is by the legal allowance on an annual basis through the guidelines and the other little clauses that let them have above-guideline increases.

Even though the elevator is back in service or, as in Ms Poole's example, the laundry rooms are back in service, or whatever it is, even though the cause of the reduction has been remedied, surely to goodness you are not going to say that the rent has to stay at that lower figure when the cause of the reduction has been remedied and is no longer a factor for the legitimate decrease in rent, as you call it. Surely this is not what you saying in this bill?

Ms Harrington: Maybe I will ask Ms Parrish to comment as to whether the situation of the elevator part might lead to such a situation as you are talking about.

I just want to say that from what you have discussed in the last five minutes, I would be led to conclude that you do not believe that tenants should have the right to have their rent reduced at all, no matter what the state of their building is. Really, you are then giving tenants absolutely no power whatsoever; they have to endure whatever happens.

A year ago, I went out to Parkdale and I went through some of the buildings there. One was almost like a ghost town; it was so scary. It is a huge complex of two buildings called West Lodge.

Mrs Marland: That is absolutely not what I am saying.

Ms Harrington: What I am saying is that the rents should be in line with the condition of that building. Now, if improvements are made, if the building is sold and money is put into it, then obviously the rents can be raised. But if that is the state of that building, the tenants should have some access to have the rents reduced.

Mrs Marland: So we do not have on the record what you are saying you heard me saying, I am not saying that, Ms Harrington.

Ms Harrington: Well, it sounded like it.

Mrs Marland: It may have sounded like it to you, so I am going to make very clear what I am saying. No, I do not believe that where a building is in an appalling state, tenants should not have some rights. But what I am asking you --

Ms Harrington: Would you believe they should have their rents reduced? That is what this section says.

Mrs Marland: No, excuse me. I did not interrupt you; just let me finish. What I am saying is that where --

Mr Mammoliti: You have just said it twice.

Mrs Marland: If you wake up and interrupt, Mr Mammoliti, you had better sit in and follow all the dialogue here. I am getting a little cross.


Mrs Marland: Mr Chairman, I am waiting, and I did wait until the parliamentary assistant finished. What I am saying is this. If it is an example such as she gave, where a building is in a horrible, deplorable state, of course I am not saying that tenants in that --

Mr Callahan: On a point order, Mr Chair: I distinctly heard -- I do not know what his riding is -- Mr Mammoliti say that Mrs Marland lied. That is clearly not parliamentary and I think he should withdraw that comment.

The Chair: As you know, Mr Callahan, the Chair can only rule on comments that he hears directly. I did not hear Mr Mammoliti make any comment to that effect. If I had, then I probably might agree with you. Mrs Marland has the floor.


Mrs Marland: I do not think any of us are interested in what Mr Mammoliti says anyway, so it is irrelevant, as far as I am concerned.

If a building is in a deplorable, deteriorating state, then I do not think tenants need to tolerate that kind of condition. What I am asking this parliamentary assistant and this government is, if a landlord is mandated a decrease in rent because of a problem -- I only gave the elevator as an example. I am not a landlord of residential rental accommodation so I am not in a position to have a whole myriad of examples of what kinds of situations can develop in these buildings that may cause this marvellous wizard, the rent officer, to reduce the rent. My question is very direct: Once whatever caused the rent to be reduced has been remedied, why are you then saying rent increases from that point on will have to stay within the legal annual guideline limit?

Is that what you are really saying? Even if it is a very expensive remedy and consequently the reduction in service is measurable and the rent officer says: "No way should you be paying that much rent. You are paying $500 now; we are going to reduce it to (48$" -- this is the example I gave you, and in that case, are we not talking about a 20% reduction? I am not a mathematician but I think $500 to $400 is about a 20% reduction. Are we saying that for them to recover the 20% reduction they are going to have to go through the guideline every year, and anything above the guideline is going to go through all the other equations legally allowable in this legislation? It may be years before they ever get back to the base rate of $500, let alone other legal limits they could have had above $500.

If you are so sincere about the rights of individuals, as the socialist party you are, surely the rights go to everybody. The rights go to property owners and the tenants. Yes, if the place is deplorable, dilapidated and deteriorating the tenants should have those rights, but surely also when the landlord remedies the cause of the rent reduction, the rent could at least go back to what it was at the time the reduction was granted. That is the question and that is what I said. I did not say tenants did not have any rights.

Ms Harrington: So you agree that tenants should have the right to have their rents reduced, which in fact this section says. That is exactly all it says.

Mrs Marland: I do not agree with this legislation because of the authority given to one individual without a right of appeal. You can devalue my land in this province by downzoning it under the Planning Act, but I have a right of appeal. If I own land, I would have a right of appeal to the Ontario Municipal Board. It is incredible to us that such a strong, powerful statement is made in this section and it is with one individual. At least when your property is downzoned and consequently devalued in this province, a bylaw has to be passed by a municipality; a municipal council votes on it; a number of people look at it. In this case, we have this one wizard, this one person, the rent officer. It is hard to believe, as I say, that people think you fight as a party for the rights of people. Just tell me if you would consider, where the remedy has been provided to the cause for the rent reduction, having the rent revert to what it was at the time the judgement was made by the wizard.

Ms Harrington: Oh, let's not be too facetious.

Mrs Marland: The rent officer.

Ms Harrington: I certainly am glad to hear you care about people's rights, the tenants' as well as the landlords'. I think the easiest way to characterize this is, yes, the tenants do need some rights and I think everyone, including the opposition, understands that this is probably the reason behind this particular part of the legislation: to give the tenants that empowerment over their lives; over where they live; to have some kind of ability to deal with the system and landlords.

I believe very strongly that the balance was not equal and we are trying to bring that balance about in a more equal way. It makes plain, ordinary sense that if a building is in this state the rent is lowered, and that rent can be put back up if those things are remedied. It will cost money to have it remedied and if the above-guideline amounts are spent for necessary capital repairs, then the landlord can put through above-guideline increases.

Mrs Marland: Above-guideline increases within the parameters of the legislation. I have the option of moving into two apartment buildings. One building has a laundry room on each floor for the tenants and it may have a swimming pool in the basement. I have a building like this in my riding. The building beside it does not even have laundry rooms any more and it has never had a swimming pool. I decide it is affordable for me and my standard of living and I would like to move into the building with the laundry rooms on each floor and a swimming pool, so I elect to pay a higher rent and move into that building. Now, if my landlord comes along and decides there is so much vandalism to the laundry equipment that he is shutting down those laundry rooms on every floor and is going to fill in the swimming pool because it is going to cost him too much to repair it -- it is an older building in this particular case and the pool is presenting problems. He elects that he has no options because under the rent controls he cannot afford the major cost to repair the swimming pool, so he decides to close it and fill it in. I think I am then entitled to a reduction in my rent.

If the landlord decides that whatever the cause of the reduction is remedied and I get a reduction this year because I am without those facilities, and maybe he decides that next year he is going to reinstate the laundry rooms and the equipment in them and so forth --

Ms Harrington: Sorry, Mrs Marland, have you finished your question?

Mrs Marland: No, that is why I stopped, because I know you cannot listen to both of us at once and I know you have to get the advice from Ms Parrish, so I respect that.

So I get the rent reduction this year. As a tenant, if the landlord remedies the problem in my building, I would be quite happy to have that rent revert to what it was when I originally agreed to rent in that building with those services available. Once the rent officer has made that decision for the rent reduction, you are saying, if we understand this, that the only way he can get it is through the annual allowable increments under the bill and the above-guideline limit exceptions that he can apply for, and that may be nowhere near the reduction allowed the year before.


Ms Harrington: The reduction would correspond with the problem and the state of that building.

Mrs Marland: Would you say that again?

Ms Harrington: If the rent was reduced, it would correspond to the problems or the state of bad maintenance in that building. Why would you say it should be reverted to what it was?

Mrs Marland: My example was not about bad maintenance in the building at all.

Ms Harrington: It was reduction or withdrawal of services.

Mrs Marland: Yes, and I would like the answer to the question I placed. I asked, and I think very clearly, about something that is reduced in service and facility, for any number of reasons on the property owner's part, yet when I went in there I agreed to pay $600 because it had all these facilities.

Do you really want this bill to say that when those facilities come back and the tenants are willing to still pay the $600 after they have had a reduction to $500 or whatever it is -- the numbers do not matter here, it is the principle we are trying to deal with. I am trying to find out if you really believe, or do you understand, or is that the justice -- is that what you want this bill to say, that once there has been a reduction, that is it; if the cause of the reduction is eliminated then the rents cannot go back to where they were?

Ms Harrington: If a landlord in Mississauga were to take away the services of the pool or the laundry room, he would think about those services very clearly before he withdrew them. If he no longer wanted to offer laundry services or a pool, then a year later he is not going to decide, "I am going to now make a new pool for these people." I think you have to decide what kind of building and what kind of service you are going to provide.

Mrs Marland: I am sorry, you cannot get out of it this way. Let's give another example. I am the landlord this year who decides I really cannot, on my present income, afford to replace all the continually vandalized laundry equipment on each floor. This has happened in the building I am speaking of. It is no fault of the tenant and no fault of the landlord. People have gained access to this building and vandalized the laundry equipment because they are looking for money primarily, then they go nuts and it is just not repairable equipment.

I am the landlord this year and I decide there is no sense continuing to give this service to my tenants, although the tenants in my building are paying more because that service existed. Okay. The rent officer grants a reduction in rent because that service is no longer available. Fair enough. Next year there is a new owner in that building. You said if the landlord decided to do away with it this year, it is not likely he would decide to bring it back next year. I am saying we cannot presuppose what an individual landlord would do, nor can we presuppose what a new landlord might want to do.

Your legislation applies to whoever owns the building, so we cannot argue it the way you are arguing it. You cannot say it is not likely he would do this. In fairness, it does not matter who the owner is. What matters is what the building consists of, what the conditions were when the tenant signed a lease in that building. That tenant decided, yes, I want to live in that building because it has the things I like and the things I want. It has the living environment that appeals to me. If that changes there is a tremendous reduction in the conditions for that tenant. Yes, there should be a right if a service has been provided and then withdrawn.

Ms Harrington: It is very good to agree. I appreciate that.

Mrs Marland: I am not agreeing on how it is done, I might add, because I think this arbitrary one-person decision without right of appeal is bizarre, at best. Totally unjust. But tell me if what you are actually saying in this bill is that it does not matter if the current landlord puts the services back in; you are still not going to establish the base rent, the maximum rent, at where it was except through the steps the guideline limits and the above-guideline application takes.

When you answer that, could you also consider whether it is possible for a landlord in those circumstances to apply for an above-guideline limit to bring it right back to where it was? If there is a vehicle in there for the landlord to achieve that? Maybe the decrease has been 20%, $500 to $400 a month. If it pertains to the individual cause and the individual cause is remedied, in other words, with the evidence that is given for the reduction, if it can be proven in front of the rent officer that there is now evidence that the particular cause has been remedied, is it possible that you would give them the 20% increase back and restore rents to where they were?

Ms Harrington: I certainly understand what you are saying. I think you will appreciate, after this last discussion, that what we are in effect doing is giving tenants some power. Therefore, the landlords will consider very carefully trying to either maintain the service or maintain the building. This is going to be a very powerful tool, and we believe it is going to make some significant change in the lives of tenants in this province. That is why this is here.

I would like to go a little further to your real question here, and I think we are just going to have to agree to disagree. Fundamentally, the reason for this whole legislation is stability in the rents, stability in the lives of tenants so that they are not thrown out of their apartments because they cannot pay. Certainly in the type of economic climate we have people are not getting 6% raises. Here we have legislation that caps the rent at 6%, and 9% at the very maximum.

What we are saying is that if a tenant moves into that building when the rent has been reduced to $400, that is the situation. That is what he expects to pay and that is the condition he finds the building in, without those particular services that were taken away, and he moves in on that assumption. That is the situation he finds and that is the maintenance level of that building he finds.

We do not believe there should be large increases. What you were saying is that if the rent reverted back to the $500 level, that would be an increase of 20%. We are saying, no, we will not have that. I guess we will just have to agree to disagree.

Mrs Marland: What you are saying, then, is that you do not really believe in the rights of tenants, because what you are saying is that in a commonsense approach to this, the tenants who will move into a building in one year at the reduced rent then have the power to control the environment for those tenants who may have been there five or 10 years. What you are saying is: "Okay, the rents are reduced; now that's what the rents are," and there is no incentive for --


Mr White: On a point of order, Mr Chair: I am sure Mrs Marland would not mind the brief interruption. I would like to, through the Chair, welcome the delegation from Korea. Their new venture into democracy at a regional and local level I am sure is a major challenge for them. I hope we can offer them something in terms of our own processes.

The Chair: That of course was not a point of order, Mr White, but I would convey the welcome of the committee here today to the members of the Seoul council. I hope you will enjoy your stay here and learn something about the parliamentary process as we go through Bill 121, which is a rent control bill, clause-by-clause. Welcome here today, gentlemen.

Mrs Marland: Mr Chairman, I realize it is the privilege of the Chair to officially welcome delegations. I do not know if anyone else in this room has had the privilege of visiting Seoul, but our son was competing in the Olympics in 1988 in rowing and our family spent two weeks in your beautiful city.

Not having any idea what that visit would be like or what the city would involve for us, and not having any experience before with the Korean culture and the people who live, in this case, in South Korea, I welcome the opportunity to say to you from the bottom of my heart that the feeling we had when we were in your city in your beautiful country was an experience that all of my family will remember for ever. You were very warm and very gracious. It is a feeling that words really can hardly describe, because it was a joy.

We were incredibly impressed with the organization, of course, that you gave to the 1988 summer games and impressed with the tremendous standard that you have for your families and your children through education and the standards of behaviour and caring towards each other and to visitors to your country. I wish sincerely that we could emulate what we received in your country when we were there, so welcome.

The Chair: Thank you. I pause just for a moment and maybe the interpreter would like to convey to members of the delegation a little bit of what was said.

Dr Hwang: Thank you, Mr Chairman, and your honourable members of the House and committee members.

The Chair: Perhaps if you would come up to the microphone please.

Interjection: Then it might be recorded.

Dr Hwang: As I said, thank you very much for your warm welcome. As she said, Koreans are warm but I think you are warmer people than Koreans. We as Korean councilmen really enjoy and are learning a lot about the democratic process and local politics. I hope we can get a lot of information and knowledge about local government operations.

On behalf of our delegation, I thank you very much for that. I will have to interpret what she said, what you said and what Mr White said to my group, if you can excuse me. Thank you very much.

[Remarks in Korean]

Mr Owens: Thank you, on behalf of the city of Scarborough. I represent the riding of Scarborough Centre. We have a very vibrant and hard-working Korean community. I would like to welcome you on behalf of myself and that community. The most recent municipal election saw one of the members of the Korean community, Dr Raymond Cho, elected to the council of Metropolitan Toronto. I know that Dr Cho works extremely hard and represents his constituents at a very committed level. On behalf of Dr Cho and myself, I would like to welcome you to this country and to this Legislature.

Mr Morin: I just want to say that I had the pleasure of living in Korea in 1953 when I was with the armed forces, with the Royal 22nd Regiment, and I was close to a place called Uijongbu, quite a few years ago. I notice some of the members are probably the same age as I am and maybe we met during that time, I cannot recall, but I would like to welcome you and I hope some day I will have a chance to go and visit the area that I lived in for one good part of my life when I was extremely young. It is nice to meet you.

The Chair: Thank you. The purpose of the delegation is to watch us at work, so let's get back to work. Mrs Marland.

Mrs Marland: Thank you, Mr Chairman. The parliamentary assistant was saying that once the rent has been reduced for whatever cause, the new tenants' rights must be protected, because although the current tenants at the time of a reduction benefit from the reduction and had been willing to pay the higher rent because that was what their contractual agreement was through their lease, they now have a lower rent. But your concerns seem to be that new tenants moving in now move in at a lower rent. They come in, they pay a lower rent knowing what the existing services are. That is what she said.

If what you want to see is a reduction in services and therefore a reduction in rent in apartment buildings across this province, obviously we have a disincentive for the cause of the reduction in rent to be remedied. Why would anybody spend money removing the cause, or why would anybody spend money providing a remedy to whatever the reduction in services was if they only stand to have their rent increased to recover that work under the annual guidelines as permitted through this legislation?

I suggest you are putting the rights of the new tenants who move in at the lower rent, albeit with reduced services, ahead of the rights of the majority of tenants who are already in that building, because obviously you are not going to have even a 25% turnover in most apartment buildings in a year. You have people who live in this building who went in with leases where different facilities were available to them. They went in willing to pay the $500 a month -- this is just as an example -- because they had these facilities. The laundry rooms on each floor and/or the swimming pool, or whatever it is, now no longer exist. The rents are reduced for everybody.


You are saying that is okay. You are happy to allow that standard of living in that building to be reduced, because the things I am talking about are not work order things. You cannot require under a work order that laundry rooms be provided. You cannot require under a work order that a swimming pool be provided, but I have rented my apartment in there because those were the things that I liked, and now you are saying: "You may have been there three or four years, and sure, you wanted those things and they are gone. You don't have them any more and we think you're entitled to a lower rent." You are arbitrarily deciding for me how much rent I want to spend on my living environment. It may be more important to me to have those facilities and pay a higher rent, because I have already made that choice. I have already made the choice on building A rather than building B that did not provide those facilities. You are saying that: the new tenants who have moved in, knowing that those were the existing standards of service in that building and it is a lower rent, cannot be subjected to a higher increase.

It is rather interesting that this argument really reverses to the argument I gave yesterday about giving 75% of the tenants an option to vote for an improvement. In this case, we are dealing with a situation where we are not voting for an improvement, we are simply looking at maintaining a standard that was in the building.

I suggest to you, madam parliamentary assistant, that your answer is a disincentive to have those causes remedied. If you are happy to reduce the living environment for tenants in this province, I want to tell you that I am not, because it is unjust for a government to decide what tenants want to spend their money on. If they choose to pay more rent because they can afford to and they live in a better place with better equipment, so be it. That is the right of a human being in this province in 1990, I would respectfully suggest. You want to say, "They were granted a rent reduction and now, for new tenants in under that lower rent, we can't suddenly revert it back to what the rent was because the problem has been corrected."

Ms Harrington: I would like to ask my assistant to comment on the number, say, of cases, or the legitimacy of the types of cases you are talking about in rent reduction and what the majority of rent reduction cases might be.

I would like to also mention that there is another way of looking at the world. I think you will appreciate that there are many tenants out there who have in effect been paying much more than they should be with regard to the state of their buildings, and these are the buildings I have been in that I was telling you about, and I am sure there are many in every riding. One could even possibly say that these people have been exploited. They had no recourse to get their rents lowered. In fact, this has been in newspaper articles over the last decade, that certain buildings have been what we call "bled." The money has been taken from those buildings. The money has not been put back in for maintenance, for capital repairs, and these tenants have lived in those buildings because there has not been the choice. That is the reality of the type of world we are living in. You may be seeing certain parts of your view of the world, but I am saying that there is this other situation, and I wanted my staff person to comment on the numbers and types of those cases in which she believes there will be rent reductions.

Ms Parrish: There are provisions in the statute that make it very clear that when you look at service withdrawal, it has to be a permanent service withdrawal. Certainly cases where one elevator out of five is out of order are not likely to cross those kinds of service withdrawal thresholds. If, however, you have a situation where the landlord has clearly withdrawn the service and intends to withdraw the service, then the act provides for compensation by lowering the base rent.

I have to say we did look, at a staff level, at whether it was practical to think up some system about getting it back if you wanted to get it back in the future, but then you have to think about how that would actually work. Would you want to have situations where landlords would come in and say, "Five years ago I had this, or seven years ago I had that, and now I want to put it back in the building"? In the meantime, people have moved into the building on the understanding that this was the cost, and they may have been in the building for a long period of time but they may be seniors on fixed incomes and they may have made a decision to stay in the building because that was what the rent was.

In the rent control system, the worst that could happen to them would be that the rent would go up by guideline plus 3%. Now the landlord could reach back in time, maybe over many years, and say, "Ah ha, but now I want to give back some service," which maybe none of the tenants want. They all have laundry machines in their units or have made some other arrangement and they are now going to have to have this service back. They had not contemplated that they would get it back. They have no ability to say they do not want it, and all of a sudden here it is.

At some level, in order to be fair to all landlords as well and have a system that treats them the same, once it is clear that it is a permanent change in circumstances, then the rent is reduced and the landlord can increase from there. You cannot have one group of landlords who can add services other landlords cannot add, based essentially on historical anomaly, because the purpose of the statute is to control the rate of increase and to cap that. I mean, that is why it is rent control as opposed to rent review. I certainly understand that is not your philosophy, but it is consistent with the purpose of the statute that there should be control going up.

The only time you get this kind of reduction in rent is if there is a permanent circumstance and there is no intention in the foreseeable future to bring back these services. At that time I think the act responds by saying the rent comes down. If in future the landlord wishes to add services or wishes to add other improvements, he can do so within the parameters of the statute, just as all other landlords can make improvements or add services.

Mrs Marland: Ms Parrish, you do not understand my philosophy. You said, "I certainly understand your philosophy." I would like to tell you that you do not understand my philosophy.

Mr Mammoliti: Everybody understands your philosophy.

Mrs Marland: My philosophy is that I believe in equity for every citizen in this province -- every citizen, tenants and landlords alike. That is my philosophy, and that is unequivocal on my part.

Going back to Ms Harrington's comments, you said we do not have very many examples of applications for rent reductions. I have forgotten how you said it, but you said something about there would not be many examples. You were talking about numbers. I think you said they could not anticipate that there would be a lot of cases where there would be rent reductions under the guidelines that are out here. We will have to wait for Hansard to see exactly what you said, but in any case you gave the inference that there would not be a lot anyway.


Ms Harrington: I was referring to the types of examples you were giving where there was a temporary reduction of service and then the landlord would decide to put that back in. I was trying to ask my staff how significant that would be in relation to this whole portion of the act.

Mrs Marland: Right. Okay. So what you were saying was that there would not be very many, in all likelihood.

Ms Harrington: Of that temporary type of reduction.

Mrs Marland: What I am saying is, why does it even matter whether there are a lot or a few?

Ms Harrington: To put it in perspective, really.

Mrs Marland: To put it in perspective. But to put it into fairness and justice, if there only were one, do you want to treat one person unfairly or one tenant unfairly or one landlord unfairly? The numbers do not matter here. Everybody in this province has an equal right.

You say there are tenants who have been paying much more than they should have. You said there are tenants who have been exploited; there are certain buildings that have been bled. I have do not have any argument with that. There are. There are tenants in this province who have been exploited and there are buildings that, to use your word, have been bled, where there has been maintenance reduction and so forth -- no question.

But are you going to decide that this legislation is going to set a standard where what we are saying is that there is no recognition for the fact that the majority of property owners in this province are good business people who are fair to the people they sell their business to, the people they render a service to? Are you really damning everybody in the ship because there are one or two rats in the hold? Is that your way to remedy a problem? You are going to say that because there are tenants who have been exploited in this province, we are going to make this legislation work in a way that somebody who has a situation for which he is willing to invest in a remedy is damned for the rest of the life of the lease?

Ms Harrington: That will not be the case. I think I have explained quite fully --

Mrs Marland: Excuse me, I have not finished. I do not know how that cannot be the case when you are saying that the reduction in rent is there for ever except through the gradual increases back through the legal guideline limits each year. It is like saying we had better all be escorted to our cars every single night, and perhaps we should all be escorted to our cars every day, because occasionally there is somebody out in that parking lot who might attack us. Certainly there is exploitation here, but there is no credit given to all the good people. This is such a damning piece of legislation. It is saying: "The situation is unbelievable. It's irreversible unless we come in with this great big elephant gun, and we're not going to give any rights of appeal for individuals because we don't believe in the rights of appeal for individuals." That is another issue I will deal with later on, but, Ms Parrish, you talked about it being a permanent service withdrawal that would make a reduction allowable. Would you like to tell us what is permanent?

Ms Parrish: The issue as to what a service withdrawal is has been defined in regulations under the current statute, because the same issue arises in the current statute, that there can be service withdrawal, and this would again be defined by regulation. The general rule is that it has to be reasonable in the circumstances, so you have to look at the circumstances. Clearly, having one elevator out of service for a period of time is different from having no heat in the building. It may be quite unreasonable to have no heat in the building for a week, whereas it might quite reasonable to have the elevator out of service for a week.

But the usual rule is that, whatever it is, it is no more than six months, but it has to be reasonable in the circumstance. It might be reasonable to have an elevator out of commission for six months. It might be quite unreasonable to have the heat off in the building even three or four days. You have to look at what the service is. The same with laundry room renovations: It might be quite reasonable that that would take three or four months. It might be quite unreasonable to have no swimming pool at all during the entire summer months, even if it is the same three months. The general rule is no more than six months, but that it is reasonable in the circumstances.

That is how it is under the current system. We are going to do consultation on regulations. We may hear from the public that there should be a different approach.

Mrs Marland: But you have not answered my question. There was a statute in this province when our party was the government that protected tenants against loss of heat. We know all that. That has to be there to protect tenants in regard to something as basic as the supply of heat, electricity and water. That is not what we are talking about. I am asking you to give an example of what is a permanent service withdrawal.

You are saying that permanent service withdrawals are only the kinds of things that make reductions allowable. Tenants are already protected against heat, water or electricity loss. If you are going to say that a permanent service withdrawal is an allowable reduction, then you have to have a definition of "permanent." Are you saying anything beyond six months, or are you saying depending on the gravity of it? There are a whole lot of things you cannot do without, I would suggest, for 24 hours. To be 24 hours without electricity, heat or water is not acceptable for tenants, but if there are other categories of service withdrawals that can be permanent, we need to know what the word "permanent" means in that sense.

Ms Harrington: Mrs Marland, you made an allegation earlier that somehow this legislation would interfere with the operation of good landlords. I would like to tell you that certainly I think that would be stretching it. This legislation, this part of it, this phrase will not interfere with good landlords.

I did also indicate earlier that the reason for this particular section is to bring about some balance and fairness. That is the whole reason behind it.

Mrs Marland: But is Ms Parrish going to give me the answer to the question about "permanent"?

Ms Harrington: These are in the regulations. Is there anything further you would like to comment on that?

Ms Parrish: In the current statute, the regulations say that if it is more than six months, it is permanent. It could be a permanent service withdrawal if it was withdrawn for less than a six-month period but the landlord indicated it was his or her intention to clearly withdraw it. If the landlord said, "I am withdrawing this service and I have no intention of ever putting it back in again," then it might be reasonable to assume that is a permanent service withdrawal, because the landlord has said so. That is the first half: Do they say they are going to do it?

The other test is if it is more than six months and the landlord has said nothing. He has not said, "I am withdrawing this service." The service is just gone. Six months pass and nothing has happened. There has been no effort to restore it. That is what the current regulations say.

We do intend to consult on these regulations, but I have to say it appears from what landlords and tenants say that they do not seem to feel that is an unreasonable test. We have not had a lot of complaints about it. We may hear more during the course of the consultations.

Mrs Marland: Could I have a copy of the regulations, please, that deal with that subject of permanent service?

Ms Parrish: Under Bill 51, or under the RRRA?

Mrs Marland: The current regulations on the permanent service description.

The Chair: On that note, we will adjourn until 2 o'clock this afternoon.

The committee recessed at 1159.


The committee resumed at 1404.

The Chair: We are discussing subsection 21(3). Mrs Marland has the floor. Please commence.

Mrs Marland: It is time, Colleen, that I knew what your actual title is.

Ms Parrish: I am the director of housing policy.

Mrs Marland: I actually thought you were an assistant deputy minister.

Ms Parrish: I will have to send that piece of Hansard along with Mr White's kind comments of yesterday to my mother.

Mrs Marland: And Ms Poole's comments of yesterday too.

Ms Parrish: I think what also confuses people is that I am also a lawyer.

Mrs Marland: I knew you were a lawyer and I think that is part of the relationship.

I am sure you have not been able to retrieve in our recess the information I asked for, so I do not expect that this afternoon. For me to pursue my questions on what you mean by a permanent service withdrawal -- and you refer to what is already in the statute -- I need to see what is already in the statute to understand how it is going to apply in this legislation.

I have to go back to one question to the parliamentary assistant, however, because I think it is a political policy decision, not a staff decision. It comes back to the fact that if you have a disincentive to replace a service in a building, and I am suggesting if a property owner has a right to remove a service -- I do not think this legislation goes so far as to say the property owner does not have a right to remove a service even though it is in the -- maybe I should ask the question.

In the contractual agreement between a tenant and a property owner, namely, the lease, where the two leases identify services that are available to that tenant in that contract, for example, individual laundry rooms on each floor, a swimming pool, indoor squash courts or whatever other items can be considered facilities in that building, are those ever listed in the lease or does the lease always just pertain to the building as it is?

Ms Parrish: I would think the facilities that are available would be listed in the lease.

Mrs Marland: Are they? I need to know if they are.

Ms Parrish: I would start by saying people are not required to have leases. Increasingly, it is common for people not to have leases in Ontario. The practice varies from place to place. Certainly, it would be a good practice for a landlord and a good practice for a tenant to say exactly what services are in the building, but especially with smaller landlords, there is a tendency to use a standard form lease and it does not list the facilities. Larger, more sophisticated landlords will sometimes list things like parking, for which there is a separate charge. I have not seen very many leases that say things like, "Access to the laundry room between the hours of such and such," or "Use of the party room," or whatever. I cannot say in my own experience I have seen very many.

Mrs Marland: Did you say more and more, leases are not being used?

Ms Parrish: Yes.

Mrs Marland: Why is that?

Ms Parrish: With rent control controlling the notice period and the number of times you can increase the rent in a year, people often feel they do not really need a lease. It is quite common, for example, to have a lease for the first year, and then the landlord and the tenant just continue on. It is quite common to find people who will say, "I had a lease 10 years ago and they just never renewed it." They have been on a month-to-month tenancy ever since, but because they have statutory protection, about 90 days' notice and only one rent increase a year, they have actually never noticed they no longer have a lease.

Mrs Marland: The landlord and the tenant both have statutory protection without a lease.


Ms Parrish: Yes. Large parts of the lease are set out in the Landlord and Tenant Act, which says that no matter what your lease actually says, it is deemed to have these standard provisions. It is the same as your auto insurance policy. It says you have to have this in your lease; you are deemed to have those conditions in your lease. More and more landlords and tenants have relied upon that, particularly after the first year or so, and things have just sort of lapsed, I guess, because both parties have been happy with the arrangement. The tenant is a good payor and the landlord has not bothered to get them to sign on the dotted line again. It is not uncommon that this occurs.

Mrs Marland: So the reason this is relevant to this section is -- where is the record of what rent is being paid? Is it in the receipts of the tenant, if it is not written in a lease?

Ms Parrish: It is often in the receipts of the tenants, the cancelled cheques. It may be in the business records of the landlord. If the landlord is a corporate landlord and they have bona fide business records, there are all these rules about admission of business records. They cannot simply admit the records recorded by their accountant, their rent clerk or whatever they have in their business. Those things are usually referred to in the trade as rent rolls. They can adduce that evidence. If they are a registered building, then they will have their rent registered.

Mrs Marland: In the absence of a lease and if leases are not formally a requirement under the Landlord and Tenant Act, which is what you are saying I think --

Ms Parrish: That is correct. You are not required to have a lease.

Mrs Marland: Right. If the service in the building is reduced by the elimination of a facility, for lack of what other word could generally describe all kinds of things, what clear evidence is there available if I as a tenant say, "Look, when I rented this place I rented it because it had a, b and c?" Now the landlord has chosen to eliminate those and the standard of the building in terms of facilities, maybe the overall standard of the building, has remained the same, but some of these things have been eliminated. If there is no contractual agreement between me and my landlord about what my rent is, where is the security for me if I say: "I used to have this, this and this. I don't have it any more"? Is it back to the word of people who have been living there for some time as evidence?

Ms Parrish: I will start by saying that just because there is no written contract, it does not mean there is no contract. There may be an oral contract and the law will recognize that. There is not always an evidentiary problem because sometimes there is no dispute, and in other cases there is clear evidence because there is a written record. Where there is that kind of issue then, yes, as in any case where there is oral evidence, the person doing the hearing has to weigh credibility, the evidence -- if five or six people say the same thing, it is more likely to be true -- and other evidence that might be appropriate, pictures and so on. Then they have to decide which evidence seems the most credible. That is how evidence is often adduced both in the courts and before tribunals.

Mrs Marland: If I can go back to the parliamentary assistant, if we are really going to reduce this rent because of a permanent withdrawal of service, which was what made the rent reduction allowable according to Ms Parrish this morning, and that service were to be reintroduced, you are saying it can only be reintroduced through the normal annual guideline limitations and the application for something above guideline, because you have to protect the tenants who have come in at the new lower rent. That is what you said this morning.

Can you tell me why you are willing to reduce the standard in that building to the lowest common denominator on the basis that you may have a few new tenants who have come in at the lower rent, even though the landlord is happy to reinstate whatever that service was? There should be some entitlement to the long-term tenants who have had the pleasure of that service and entered into their contractual agreements with the landlord based on those services being there.

Ms Harrington: This is going over the same ground we covered. My point this morning about the new tenants moving into the building is certainly, I believe, a valid point. It is related to a bigger picture, not just in isolation. First of all, for you to say this landlord would be happy to reinstate the service, seems to me a little bit remote. We are talking about services which obviously are going to be permanently removed. That is what we were talking about. When that happens, the building obviously is at a different level of rents and a different level of service. It is at a certain level of affordability, and that is what we are trying to protect. If that building has rents in a certain range, we do not want that stability for those tenants changed.

If people living in that apartment building wanted further services, probably those people, if they were able to pay higher rents, would find a more suitable building, one that was affordable to them and had the services they want. What we are protecting is not just the people moving in; we are talking about the whole affordability question.

You were concentrating just on the people who had moved in. This morning, I believe I broadened that to ask you to look at the other tenants in that building, not the ones who had just moved in at the lower rent, but those who have been there for many years and who have asked for this reduction and have in many cases been paying much higher rents than they should have been for the types of situations I would say they possibly endured in their living accommodation. I would like to look at the broader picture, not just the tenants who move in, but all the tenants who have been living there for some time. If that building does not have those services, it should be at a lower rent and that lower rent should be protected.


Mrs Marland: Okay. You have drifted back to your example of deteriorating buildings with deplorable conditions and I have already acknowledged that. Where I wanted to stay was where a service is temporarily removed. I see we have now been handed the regulations from 1986, from the RRRA. I think it is incredible that you are talking about affordability and stability and in the same sentence you say, "If there has been a reduction in rent because the services are no longer there and if those tenants still want those kinds of services and facilities they can move to another building, because now we've established what the lower benchmark of that rent shall be."

I think this legislation is a headlong dive into reducing the standard of living for people in rental accommodation across this province, because we are interested in affordability and stability. It does not matter if we stabilize those lower rents because the services or facilities have been removed. That is now the new benchmark, and that is where the rent will be. If there are tenants in that building who enjoyed a higher standard of living before, albeit they have had their rent reduced, they have also had their services reduced and that is not really what they want. They want to live in the kind of building with the kind of facilities they contracted for maybe a year or year before, maybe 10 or 12 years ago.

In any case, there is no incentive whatsoever where rent reductions are granted for that property owner to remedy the cause for the rent reduction. That is absolutely clear now from the exchange we have had today. I do not plan to beat this to death, although I wish I could, and have it defeated altogether. If you really want to protect tenants in this province -- and we do; we believe that tenants who pay money for their rental accommodation have rights and we believe the people who own that accommodation have rights. We also want the people who live in rental accommodation to have the opportunity to live in an environment they can afford and therefore choose to live in.

If your incentive through this legislation is that rent reductions will be granted where services are not available or where services are removed and you want everybody to come down to that lowest common denominator, then I am glad that is going to be on your shoulders and not mine, because you are not giving any ray of hope, any little window of opportunity opening, to property owners to remedy. Why would they? The only money they can recover to reinstate those services is through the regular rent maximum guidelines and increases for the rest of the life of that building. If they pour in whatever amount of money to reinstate the services, they still do not get it back through the rents.

I think we are destroying a standard of living for people who live in rental accommodation under the guise of your own words, affordability and stability. Who wants to be stable in a building in a downturn in terms of its quality of environment for those people? That is not what the majority of people in this province want. But you are saying to that poor property owner, "If you remove the laundry rooms and you decide to remove these services, we're going to reduce your rent." If I were the landlord I would say: "Go ahead. There is no way I am ever going to invest in replacing those facilities or that equipment."

Ms Harrington: The landlord has to decide to remove them permanently, as is pointed out.

Mrs Marland: You have just brought in the regulations, which I have yet to read. But all I am saying is that may be a decision of that landlord, and any number of circumstances may change where that poor landlord decides to reverse his decision. He does not have any opportunity to reverse it. Maybe it is a new landlord who decides to upgrade that building but he cannot upgrade the rent, and I think that is the point.

The landlord might decide: "I am going to give up this. I do not want to be the owner of a building where the rents have been reduced and I have no opportunity to reinstate the building the way I want to have it, with certain facilities available to my tenants." The new landlord decides that he wants to put back some of those facilities, but there is no incentive for him to do that because the rents are controlled by the reduction that the wizard rent officer has now established.

Mr Callahan: The wizard?

Mrs Marland: That is what the rent control officers are, Mr Callahan. They are wizards, because they can pluck out of the air, they are all-omnipotent, they have total control over what happens to the future of rental accommodation on behalf of tenants and landlords without any right of appeal.

Mr Callahan: So that is good.

Mrs Marland: Is that not wonderful? It is such bright, progressive planning.

Mr Callahan: I think we need a Magna Carta.

Mrs Marland: It is obvious that there is no point in my continuing this discussion with the parliamentary assistant, because the government has made up its mind that once it gets those rents down by a decision of the rent officer without any right of appeal to anybody, no matter if the condition is remedied, the rents cannot be increased above the guidelines permitted in the legislation, through the application for small increases above the guideline. In any case, there is no way for them to recover the cost of the remedy, so why would they do it?

The Chair: Before continuing in the rotation, I just note that I have received a letter from Ms Parrish that I believe all members have on their desk. I have also received a copy of the regulations Mrs Marland asked for this morning. I believe all members have copies.

Mr White: We are still discussing subsection 21(3) are we?

Mr Abel: Yes, still.

Mr White: It seems to be a remarkably small clause for such long explication.

Mr Callahan: Big things come in little packages.

Mr White: There were a couple of points actually that my colleague Ms Poole has mentioned that I wanted to pick up on. That of course was four and a half hours ago and one tends to forget these points after a time.

I would like to mention this clause. I think it is a very significant one. It is a very important clause because the tenants of our province -- Mrs Marland has mentioned how tenants have been exploited -- can be very confused when they read "maximum rents" on the submissions from their landlords. It can be very confusing because what is presently affordable, what is presently the marketplace level for rents, is of course not necessarily what the maximum rent could be. It is very confusing to see these different figures.

In an apartment where I have some tenancy, I have had for the same apartment three or four different figures quoted from the same landlord. They are several hundred dollars apart, and fortunately I was able to secure the lowest of those figures.

I thought a number of points Mrs Marland brought out were significant. The marketplace, of course, is the means by which many people in her party would, I believe, like to see regulation of rental accommodations. At present, what is legal, what is potential, is way beyond what the marketplace can bear, so in consequence the rents that are asked are often quite reasonable. In time to come, I am wondering what will happen.

What will happen for those people who have entered into contracts with their landlords, who have tenancy now and can renew, or people who come in and can secure an apartment at a reasonable rent? Will those landlords be charging the maximum rent plus 6%, plus 6%, plus 6%? will there be any protection at all for those tenants who are now paying a much more reasonable and affordable rate? I am wondering if this clause deals with that issue. Ms Parrish, could you respond to that?


Ms Parrish: No, this clause does not deal with that issue. This clause deals with whether or not an order could actually reduce the maximum rent. It may be that landlords are charging less than the maximum rent, and if they are, they can increase their rent to maximum rent, but they can only do it under certain circumstances. You can only increase the rent once a year, so every tenant has the protection that the rent will never go up more than once a year.

Landlords must give 90 days' notice of any rent increase, including the statutory increase. They can only move to maximum rent if they have told the tenant, when the tenant moved in, "I am charging you X, and that's the actual rent I'm going to charge you, and by the way, this is the maximum legal rent." If the landlord does not tell you that this is the maximum legal rent when you move in or the maximum rent he can charge, he cannot move to that maximum rent for another year. So they have to give the tenant at least one year's notice that they actually charging more than the maximum rent. But this particular subsection, 21(3), deals with decreases in maximum rent, and not increases.

Mr White: In the situation I described, would it not be possible for that rent officer to reduce the maximum rent?

Ms Parrish: Yes, the rent officer could, if the right evidence was adduced, reduce the maximum rent below what its current level is.

Mr Owens: I would like to ask Ms Parrish a question about the reduction of rents in the event of withdrawal of services. Is there any average dollar amount that you can think of at this point that rents would be reduced? Are we talking about dollars in double digits or triple digits?

Ms Parrish: I cannot give you an average. I have not done a survey. We do sample orders to see what happens. Usually service reduction cases involve things like parking and swimming pools, lockers, things of that nature. They are usually fairly modest amounts frankly. You do get occasional cases that are very bad, where the landlord has withdrawn almost everything. But most cases involve fairly modest amounts of money, such as $10 a month for the locker or $20 for the parking or whatever, because they are usually services in the common area and the base rent is usually for the unit.

Mr Owens: So in terms of the catastrophic and dire predictions made this morning during Mrs Marland's line of questioning, you do not see that in reality the $10 or $20 is going to have that kind of an impact on the landlord? Is that correct?


The Chair: Order. I would like to be able to hear what Mr Owens is saying.

Ms Parrish: I would hesitate to predict, but certainly in the case of service withdrawal there is no particular reason to think there will be a significantly different change in pattern. Usually landlords withdraw services for a reason. I do not think they are more likely to withdraw services now than they were before. It is likely to be the same kinds of services that are being withdrawn. I do not think there will be a significantly changed experience.

Mr Owens: We talked this morning about when a reduced rent appears to be permanent. I think Mrs Marland made a comment about vandalism and the inability of the landlord to repair the faucets in the laundry room or whatever. At what point does one determine permanency? Is that a statement of fact by the landlord? Or is it something that is determined after a period of time by a rent review officer?

Ms Parrish: Under the current act it is determined by a test which is set out by regulation. The current test, which was distributed to the members, says, "No reduction to the rent increase shall be made for the discontinuance or reduction of a service or facility if the service or facility is restored within a reasonable length of time not exceeding six months."

Mr Owens: So would that order be retroactive to the first date that a service was withdrawn, or is the effective date the date of the order?

Ms Parrish: I believe the effective date is the date of the service withdrawal. If I could have a moment, I may want to just check that with one of our lawyers.

Mr Owens: I have all the time the Chair would like to give me.

Ms Parrish: I recall that for service withdrawal it is the time that the service was withdrawn. For inadequate maintenance it is the time of the application.

The Chair: Are you wishing to check that, Ms Parrish?

Ms Parrish: Is that possible? May I just check that?

The Chair: Or we can have your lawyer approach.

Ms Parrish: Can I do this? I am almost positive that for service withdrawal the test is at the time of the withdrawal and in the case of inadequate maintenance it is at the time of application. I will just confirm that with our lawyers. Perhaps you can --

Mr Owens: Continue to ramble, as I am. In terms of some of the other comments that were made this morning regarding subsection 21(3), I find it astounding and, I must admit, quite miraculous, and I must congratulate the landlords in the riding of Mississauga South for doing their maintenance as they should and keeping the buildings neat and intact and providing the services as per the lease, because the kinds of difficulties we have seen in Scarborough would cry out for a subsection like 21(3) to be put in.

I think of a particular situation. Shortly after I was elected I was out to organize a tenants' association in one of the buildings in my riding. We had the first meeting of the tenants' association in the lobby of the apartment building. One may ask: "Why did you do that? Is that just a good MPP meeting his constituents in the lobby, as Ms Poole indicated she does on a regular basis?" No, the reason we had to meet in the lobby was that the landlord had converted the meeting space he had within the building to private accommodation for tenants. Shortly thereafter, after our meeting, I gather word got back that what he was doing was not appropriate. So we had a meeting room for the second meeting of the tenants' association.


This is not something that took place over a two-week period and people wanting to utilize services like a meeting room or a swimming pool. I think perhaps even more important is the issue around maintenance. I know we do not want to use that N-word, neglect. That seems to cause a whole bunch of trouble for folks opposite, but when you look at the kinds of situations we have in Scarborough where maintenance is a definite issue, Mrs Marland is saying: "No, you shouldn't have the right to roll back the rent. If you do, however, we want you to put it back to the old amount forthwith upon completion of the repairs."

My question, rhetorically through the Chair of course, is around the issue that the landlord or the property owner has been doing this over a period of years. Neglect does not occur within a 30-day period. Neglect takes its toll over a period of years, but meanwhile these tenants have been paying full rent. On one hand the member of the third party questions, "Isn't it terrible that we wouldn't want to return the amount back to the full maximum rent upon completion?" I think the second part of that question is in terms of returning the money the property owner has made during this period of the N-word, neglect. Do we not also need to take a look at a method of returning the profits that have been made while the landlord has not kept up his building?

The thing that bothered me most and has concerned me throughout this clause-by-clause that I have been involved in, and again today under 21(3), is the issue of the dire predictions and the fearmongering that has been going on on the part of the members opposite. If you look back at the legislation that this government passed around the Mortgages Act to protect tenants in the event that their buildings do go bankrupt, there is no need to try to spread fear among tenants. They will be protected.

It was extremely timely that this legislation was passed, because I had tenants in my riding contacting me to indicate that they had received notification that utilities were being cut if moneys were not paid by a certain date. "What are we going to do? Will we still have a place to live?" I was able to assure those people that they in fact would have a place to live. The lack of understanding as to why we would need a subsection like 21(3) to be in the legislation concerns me.

Another issue I find passing strange is the issue of the new owner. One assumes that if at this point the potential new owner has any kind of business acumen, he is going to take a look at the condition of the building. He is going to take a look at the costs associated with the purchase of this building, and by costs associated with the purchase of this building I mean specifically around what one would have to do to bring these buildings up to standard. If the current owner tries to say, "There are no orders against this building," he is clearly misleading the potential purchaser. As I say, a business person with any kind of business acumen is going to attempt to negotiate an appropriate selling price.

I think some of the cases we have seen cited in the press of recent date are probably fairly spectacular. I once again refer to some buildings in the Parkdale area represented by a member of the official opposition, Mr Ruprecht. They do not always have to be that spectacular and that devastating. Tenants are being denied services, are living in buildings where maintenance is not being done and need to have the kinds of avenues subsection 21(3) permits.

If landlords intent upon keeping their buildings up to standard, if they are interested in making sure the tenants are happy, then the issue of 21(3) is not going to be a problem with these landlords. I understand this clause causes particular grief within the landlord community, but there are lots of laws where if people sat down and actually thought of the kinds of coercive power government has over people, they would be quite concerned. But because most people abide by the law, most people do their duty, most people fulfil their obligations under the kinds of social contracts we as human beings have with each other, then it is not a problem. However, we need the alternative this kind of clause offers so that in the event the landlord does not live up to his or her obligations under the lease, under the kinds of social contracts we have, then there is an avenue for relief.

Again, I am not surprised that this clause offers or causes the kind of difficulty it has to the member of the third party who spoke this morning and into this afternoon. I will issue this invitation here and now, to bring this member to Scarborough to take a look at some of the buildings that are out there and ask her honestly whether there is not the need for this kind of means to remedy. I issue that invitation today and I would be glad to host her at any time.

The Chair: Ms Parrish had an answer to one of Mr Owens's questions, I believe.


The Chair: Order. We would be most interested in the response to the questions that Mr Owens had raised.

Ms Parrish: I just wanted to confirm the answer I gave to Mr Owens. If there is a withdrawal-of-service order, the order is effective on the day that the service withdrawal first occurred. If there is any other kind of order, for example, due to inadequate maintenance, it is effective on the day which is set out in the order, which cannot be before there has been an application by the tenants requesting a reduction in rent.

Mr Owens: So at this point, under current regulations and legislation, there is no means to remedy for tenants with any immediacy. I understand there is a process where one can apply for rebates, but in terms of the net positive effect for tenants -- I do not see this as a particularly political question -- is this not a better way, under 21(3), to approach the issue?


Ms Parrish: Under Bill 121 tenants may make an independent application to deal with inadequate maintenance or service withdrawal instead of having to use it essentially as a shield to a landlord's application for a rent increase. They can make an individual application for a rebate. Sometimes when you are dealing with a whole building that is very difficult, because under the current system you cannot have whole-building review for tenants. They have to do this on a case-by-case basis, which is quite cumbersome.

Mr Owens: There is, however, the process where one does not necessarily have to deal on a case-by-case basis. At some point a whole-building review will be conducted automatically by the rent review officer.

Ms Parrish: Under Bill 121 this issue must be considered whenever a landlord makes an application, so that would be one situation. Or the tenants may make their own application on a whole-building basis. That is different from the Bill 51 rules. That is, the tenants have the same ability as the landlord to make applications, which differs from the current Bill 51, which triggers most applications, except for rebates, from landlord applications. If you have a building which is very poorly run, for example, and your landlord never makes any applications for anything, it is very difficult to bring your case forward. That has changed under Bill 121, to give landlords and tenants more equal ability to bring their issues to the forefront.

Mr Callahan: It is nice to be back. I feel like this issue has been beaten to death for about seven years. I have had a chance to flip through the bill and, wow, I am glad to see that this whole process has at least come up with a few glitches that were brought to our attention. When I first looked at it I was going to ask how a tenant can bring an application after he is no longer a tenant, but I note that was put in by amendment. At least something is coming out of the process: the holes are being filled.

I remember when we were the government and we brought in our Sunday shopping legislation. I remember the now Premier, the now --

Mr Mammoliti: Is this relevant?

Mr Callahan: Certainly it is. Of course, this is all a premise coming up to what I am about to say.

Mr Owens: This is good political analysis we are getting.

Mr Callahan: The now host of the late-night show on CFTO, affectionately known by another name by the Toronto Sun in other circles, would scream about the fact that you could not protect workers because the reality was that if you brought in legislation as we did to allow tenants in shopping plazas not to have to open, what would happen was that the landlord would find some other way to get rid of them. I have to throw back the same question.

The premise was made by Mr Owens that people obey the law. I think that is probably a good starting point. We have to assume that is the case. When you create a bill like this that is so constricted on people, particularly landlords who have invested their capital in the building, it is like toothpaste: if you squeeze it enough, it will force it out some end. That is exactly what will happen here.

What I want to know, and maybe one of the government members can give us this big answer, is what happens when tenants who like where they are living, like the accommodations they have and the landlord perhaps is charging illegal rent, and do not want to go to the wizard, as Margie calls him. What do they do? How do they get recourse? I had a call this afternoon at my office here about a situation where I was told a couple who liked their accommodations are paying $900 a month for a two-bedroom house. They are paying $1,500 every three months to their landlord, supposedly for taxes. I find that very difficult to understand, because those are extremely high taxes. The only thing I can conclude is that this guy has come up with a very innovative way to collect higher rent. They cannot do anything. They want to stay where they are. If they blow the whistle on him, they are gone.

How do you answer that question? If you force people into this particular predicament by the contents of this bill, how do you really protect tenants who, number one, either like the location they are in, like the accommodations they have or just cannot afford to go anyplace else? How do you protect them? Where is there anything in this bill? Point to something in this bill, or in the Landlord and Tenant Act for that matter, that protects those people who are being hosed by the small number of those who have tried to squeeze the toothpaste tube and it has come out the wrong side. How do you protect them? Is there anything in here to protect them?

The Chair: I am hopeful that the answer will be framed in the context of subsection 21(3).

Mr Callahan: The reason I raised it is that it really is germane to the section, because the section is one of the sections in this bill that is putting constraints on landlords in terms of the economic return to make it worthwhile to be a landlord.

I want to know if there is something in this bill or in the Landlord and Tenant Act that magically protects these people in my scenario who like where they are living or cannot afford to move elsewhere or whose kids are going to school in a particular neighbourhood. How does this protect them in terms of illegal rent increases? Can somebody tell me that?

First of all, I will ask, from a legal standpoint, is there anything in this bill or in the Landlord and Tenant Act that would allow them to secure their remedies, without them being pitched out or evicted or their life made so bad that they have to get out?

Ms Parrish: The answer is yes. There are many protections, both in this bill and in the Landlord and Tenant Act. But I feel somewhat constrained in the sense that none of those remedies is in subsection 21(3) and the Chair has asked that I confine my discussion to that.

Mr Callahan: I do not think he meant to be that constrictive, did you, Mr Chair?

The Chair: I probably did.

Mr Callahan: From some of the stuff I have heard go on here this morning, you can talk about almost anything.

Ms Parrish: Mr Chair, I am in your hands.

The Chair: We are discussing subsection 21(3).

Mr Callahan: I am relating this to it because, as I say, that is a terribly exciting section.

Mr Mammoliti: You are better off talking about Robin Hood.

Mr Callahan: No, it is a terribly exciting section. It is fine to try to pass legislation that is improperly balanced because the net result is that you create an unreal world. That is all I am saying.

Ms Harrington: I would just like to make a comment. It will not answer everything, but obviously our government and many governments try to give people rights and give people protection under legislation. That is why we are here.

Mr Callahan: Agreed.

Ms Harrington: In an ideal world, it certainly would work. But I think everyone realizes that no matter what you put in, there are going to be those people who find a way around it. In that particular case, something strange is happening. On the other hand, even if you give people rights and try to enable and empower them and give them choices in their life, it is really up to them, on the bottom line, whether they are going to submit themselves to this or they are going to try and take some action. Even if there is an avenue open to them, it is up to that individual. Nothing is perfect in life. We cannot guarantee that you live in the right house and the right place with the right school. Maybe they will have to move.

Mr Callahan: You have given the right answer, Margaret. You are at least a realist.

I have to say as well that I do not know about anybody else's community, but my last investigation in my community revealed that there are all sorts of rental accommodations now because landlords are deserting the ship left, right and centre. They cannot see any point in continuing to be landlords, so maybe this bill is shutting the barn door after the horse is gone.

With reference to subsection 21(3) specifically, I do not quite understand the bit that says capital expenditures shall not be included in determining the maximum rents for the rental units. Does that mean if a landlord does some capital improvements that are not within that rather restrictive guideline of taxes increasing by 50% or hydro increasing by 50% etc, he cannot use that as a way of increasing the rent on an application?

Ms Harrington: Are you referring to subsection 21(3)?


Mr Callahan: Yes.

Ms Parrish: That the rent officer may order a maximum rent in an amount less than the previous maximum rent?

Mr Callahan: No. I have subsection 21(3) here, I think.

The Chair: Page 25?

Mr Callahan: Sorry, I was on 23. Maybe you can answer that question. Give me a break, will you, Mr Chairman? I am just subbing in here and I would like an answer to that. Then I will let my friend the critic take over the rest of the time. Can you answer that question for me? Does that mean if capital expenditures are made and they do not fall into those categories of 50% increases and so on, special --

Ms Harrington: We give the landlord a 6% increase in this particular year, which is the guideline, and within that there is an allowance of 2% cent, which is for capital.

Mr Callahan: The answer to that question is that he cannot pass it through then, I gather.

Ms Harrington: No.

Mr Callahan: Finally, in closing -- and I do not know if I say this facetiously or not -- is this the reason that the present government has allowed Hydro to increase our hydro rates by up to 43%, in order to ensure that it might meet the test for the 50% category for next year?

The Chair: Mr Callahan --

Mr Callahan: I yield.

The Chair: That question could more properly be asked next door in committee room 2.

Mr Callahan: All right. Maybe I will wander in there.

Ms Poole: The parliamentary assistant has maintained that the reason they quickly scrambled to come up with for rejecting any amendment to subsection 21(3) is the fact that tenants want stability, and a new tenant may come in and if the maximum rent which had been reduced was increased to the original amount, it would prejudice the new tenant. This government insists on purveying the information that the only issue of real importance to tenants is rents, and it is not true.

Mr Owens: Who said that?

Ms Poole: It has been said many times. Rents are a primary focus of this government, but rent increases are only part of the picture. Tenants also want a building in which they can live, hopefully well maintained. Hopefully the building should be comfortable. It should also have the amenities which most people would say are fairly essential to leading a comfortable life, such as a laundry room, for instance.

If this government deems in its wisdom that it will not put in a mechanism to allow a landlord to put in services that were withdrawn and for which there was a rent reduction, then what incentive is there for that landlord to put the service back in? There is none. I do not know if I have to spell out what the word "incentive" means.

Mr Mammoliti: Let's talk about the moral aspect.

The Chair: If members would like to be on the list, I would be pleased to put them on the list. Otherwise, Ms Poole has the floor.

Ms Poole: Mr Mammoliti says, "Let's talk about the moral aspect." I happen to think that fairness is morality.

Mr Mammoliti: You are not being fair.

Ms Poole: If Mr Mammoliti says to me that it is fair to put in that rent reduction in the first place and then not provide an opportunity for that rent reduction to be relieved, then I say to him that is immoral and that is unfair and that is not the way we used to do business in Ontario. It is a matter of fairness.

It is not a matter of having a problem with reducing the rent in the beginning. If a bona fide case can be proved where the landlord has had inadequate maintenance or has withdrawn services, of course the tenant should have the right and the mechanism by which to get that rent reduced. By the same token, if those problems are rectified, if the maintenance standards are restored, if the services are once again put into place, you cannot give me a logical reason why that rent should not be restored to its original level. It comes down to a matter of fairness.

Mr Chair, I am about to give an amendment to the clerk for copying for members. I am not moving it at this time because I feel the most appropriate way to deal with it would be to create a new section. It is in direct reference to subsection 21(3). I will just tell you of its intention, for members' information, so that they can think about it. We obviously will not get to it until such time as we have finished all of section 21. The effect of my motion would make it possible for a landlord to have an application to increase the amount of the maximum rent by the amount it was reduced.

There are two tests that the landlord would have to meet in order to have the rent officer order the increase in maximum rent equal to the amount of the reduction. The first test would be that the landlord has to demonstrate, has to prove and provide evidence to the rent officer that the standard of maintenance or repair of the rental unit, or of the complex, if that is the particular area where the rent was reduced, which was the subject of a previous application, is in compliance with the applicable municipal standards or the provincial standard. The second part of that would refer to the restoration of service by a landlord, or a facility that is once again provided by a landlord, where the landlord can show that this service has resumed. In these two instances, the landlord would have a remedy in order to go back to rent review.

I am going to leave it at that. As I said, I will not move that particular amendment right now, but I will provide a copy for members as soon as it is back from the clerk's tender mercies.

The Chair: Thank you for the information, Ms Poole.

Are there further questions or comments on subsection 21(3)? Shall subsection 21(3) carry? All in favour? Opposed? Carried.

On subsection 21(4), are there questions or comments or amendments? Perhaps we could have a brief explanation of the section.

Ms Harrington: Subsection 21(4) sets out that the rent officer shall not order an amount which is greater than the amount proposed by the landlord. It is fairly clear.

Ms Poole: This section was put in to remedy a problem which was encountered under Bill 51 where there was no limitation on a rent officer as far as the amount of the increase. If the landlord had made a mistake in the application or had provided information which later proved that there should be a larger rent increase, then in fact the rent officer had the right and the power to order a rent increase that was actually greater than the application had proposed.

I think this is a very reasonable amendment to clear up what I am sure was an oversight in the original legislation and certainly not the intent. I think it will certainly suggest to landlords that they should be extremely careful when they put in their application that they ensure that all their documentation is enclosed and that their calculations are correct, because they are not going to have that opportunity for a rent officer to give them relief at a later time in that regard. The Liberal caucus will be supporting this amendment, or at least I will. If my colleagues cooperate, they will too.

The Chair: Further questions, comments, amendments to subsection 21(4)? Shall subsection 21(4) carry? Carried.

Next is subsection 21(4.1) as printed, I believe.


Ms Harrington: Yes. Subsection 21(4.1) provides that if the maximum rent ordered by a rent officer as a result of an application for an above-guideline increase includes any new capital components, the rent officer shall set out in the order for each rental unit the total amount of each capital component and the date on which it is to be deducted from the maximum rent. Subsection 21(4.1) is a government amendment to reflect the policy regarding costs no longer borne and how this is to be indicated on the order.

The Chair: Questions, comments or amendments to subsection 21(4.1)?

Ms Harrington: I would just like to comment that originally the Liberal Party did support us and initiated some conversation in this direction. This is a technical amendment that would set out the time and amount of the capital components that came into the rent and therefore the time and amount that would be taken out.

The Chair: Shall subsection 21(4.1) carry? Carried.

Subsection 21(5). This is also as printed.

Ms Harrington: This is jurisdiction to carry forward amounts justified for capital expenditures in excess of the amount which can be ordered. It is set out in section 21(5). The excess may be carried forward for a period of 24 months from the first effective date of the rent increase in the order. Note that this is a government amendment to reflect the policy change that a carry-forward allowance may be carried forward for 24 months for all buildings, regardless of the size of the building.

The Chair: Questions, comments, to subsection 21(5)? I note that we have stood down two subsections from section 20 that are contingent upon the decision on this amendment.

Ms Poole: Mr Chair, the Liberal Party has an amendment to the government amendment on subsection 21(5). I am just asking for your guidance at which stage it would be appropriate for this amendment to be dealt with.

The Chair: I am sorry I did not note that. I think it should be moved. I notice also that the Conservative Party has an amendment. I have not had a chance to look at them, but briefly, I do not think they are the same amendments, so they will be considered separately. If you would move the Liberal amendment, Ms Poole.

Ms Poole: All members have a copy of the Liberal amendment to subsection 21(5). Just before I read it out, I would advise you of a change that is on this amendment. After talking to legislative counsel about this, the intention of the amendment was to provide four years of additional carry-forward after the additional year, making a total of five years for categories 1 to 4. When it was drafted, five had been put in as a total, so I will be reading that as an amendment as I go through.

The Chair: Ms Poole moves that subsection 21(5) of the bill be struck out and the following substituted:

"(5) If the rent officer's findings respecting a rental unit would justify an increase of more than the amount allowed under subsection (2) or (4) and the excess includes an amount determined to be justified for capital expenditures, the rent officer shall provide in the order that the excess in respect of capital expenditures may be carried forward for the period set out below if no order under this subsection has previously been made respecting that excess:

"1. Four years from the effective date of the first rent increase in the residential complex under the order if the work giving rise to the capital expenditure was substantially completed on or after the 1st day of September, 1989 and before the 6th day of June, 1991.

"2. Four years from the effective date of the first rent increase in the residential complex under the order if the residential complex is at least 30 years old and no rent increase above the guideline has been implemented for the rental unit in the previous three years.

"3. Four years from the effective date of the first rent increase in the residential complex under the order if the capital expenditure relates to substantial restoration of concrete that is necessary to protect the safety of tenants or the building.

"4. Four years from the effective date of the first rent increase in the residential complex under the order if the residential complex is a designated property under part IV of the Ontario Heritage Act.

"5. Two years from the effective date of the first rent increase in the residential complex under the order in all other cases."

Ms Poole, would you care to speak to your amendment?

Ms Poole: Basically the Liberal caucus has agreed with the government in the standard case that there be two years of carry-forward. As you would appreciate, at the time we formulated our amendment, the bill contained a section which had a different carry-forward for large buildings and for small buildings. There was a one-year carry-forward for large buildings and a two-year for small buildings. We very much felt that this should be standardized and that the two years would be a more appropriate limit.

Since that time the government has filed its own amendment, which is very much along these lines. However, we are also cognizant that there are special circumstances in which we feel a longer carry-forward could be justified, making a total of five years in four other instances where tenants could expect a rent increase of up to 3% above the guideline.

The first instance refers to those situations caught in Bill 4 where there was a freeze and the applications were not allowed to go forward. In this particular instance it is a matter of fairness. The landlords did capital repairs under different legislation and under significantly different rules. They expended money and they obtained loans under those rules, so we feel in fairness that they should be given an opportunity to at least recoup a significant amount of their moneys from this. Paragraph 1 would be in that relation.

Paragraph 2 refers to older buildings or our aging housing stock. Two thirds of our buildings are 30 years old or older, and notwithstanding the minister's comments to the contrary, older buildings are much more expensive to repair, to restore and to maintain. Many of these older complexes are the smaller ones, because as all members are aware, the newer buildings tend to be high-rise and fairly large edifices. But the smaller buildings that are quite aged need significant amounts of repairs. Sometimes, because they are smaller buildings, it would take a much longer period in which to pay off those increases, particularly when it is capped at 3%.

I think certainly from the witnesses we had come before us there was a need to address the older housing stock issue since the government had remained adamant from day one that it had established the cap at 3% and this was the maximum it was felt tenants could bear in any one given year. Given the government's adamant position in this regard, the only alternative to give relief for the older buildings was to extend the carry-forward.

The third instance relates to substantial restoration of concrete. There will be instances, and we saw one of them yesterday on the sheet provided by the ministry, where the cap plus the carry-forward would not allow that concrete restoration to be done and the landlord to recoup the moneys from it. The government may argue that not very many cases would be affected by this, but if that is indeed true, then I do not see why they would object to this particular amendment.

Paragraph 4 refers to buildings designated under part IV of the Ontario Heritage Act. I believe we had two presentations in Bill 121, and these were certainly extraordinary circumstances, but they were older buildings -- and when I say "older" I am talking in the range of the century mark -- which needed such extensive work in order to comply with the act and to be preserved that the amount allowed under the act is just a pittance and would not even begin to touch it. The sad fact is that even having a carry-forward of four years, making a total of five years, probably would not lead to the people in this particular situation recouping the money, but at least it would be of some help.

Again, this would have to be a building designated under part IV of the Ontario Heritage Act and also a building occupied by a tenant or designated as rental property, so the number of buildings that would actually fit into this category would be extremely minimal.

Paragraph 5, of course, is the category which relates to the balance of buildings that were not caught under Bill 4: buildings that are over 30 years old or buildings that need substantial restoration of concrete, where the three-year carry-forward is inadequate. All other buildings would be given the two-year carry-forward.

I am very optimistic that the government will like this amendment very much since it is so moderate and does not interfere with its concept of a cap and at the same time will ensure that repairs to our aging housing stock take place.

The Chair: Further questions or comments?

Mr Callahan: Actually, they do not seem to be picking up the bait.

The Chair: Seeing none, shall Ms Poole's amendment to subsection 21(5) carry? We have a request for 20 minutes. We will reconvene at 3:46 pm for a vote.

The committee recessed at 1524.


The Chair: All in favour of Ms Poole's amendment to subsection 21(5)?

Ms Poole: A recorded vote, please, Mr Chair.

Mr Callahan: How do we do that?

The Chair: You raise your hand, Mr Callahan.

The committee divided on Ms Poole's motion, which was negatived on the following vote:

Ayes -- 4

Callahan, Jackson, Morin, Poole.

Nays -- 6

Abel, Frankford, Harrington, Mammoliti, Owens, White.

The Chair: Mr Jackson, you have an amendment.

Mr Jackson: Well --

Mr Mammoliti: Let's hear it.

Mr Jackson: You really want to hear it? Mr Mammoliti wants to hear it. I was not going to present it, but since I have been invited to, I will.

The Chair: Mr Jackson moves that subsection 21(5) be struck out and the following substituted:

"(5) If the rent officer's findings respecting a rental unit would justify an increase of more than the amount allowed under subsection (2) or (4) and the excess includes an amount determined to be justified for capital expenditures, the rent officer may provide in the order that the excess in respect of capital expenditures may be carried forward until there is no further such excess."

Do you wish to speak to your amendment?

Mr Jackson: No, I think we had a thorough debate on the previous amendment.

Ms Poole: Just on a point of clarification, if I could ask Mr Jackson, when it says, "If the rent officer's findings respecting a rental unit would justify an increase of more than the amount allowed under subsection (2) or (4)," would you be referring in that event to an amount above the cap?

Mr Jackson: Yes. When I spoke to the previous section dealing with the cap at 3%, I indicated that perhaps the solution would lie in some flexibility with stronger conditions placed on raising the cap above 3%. This would be an opportunity to do that and the government could work with it in terms of ensuring that the cap does not go too high but that it recognizes those extraordinary cases that may crop up. For that reason, this is an opportunity for the principle of fairness to apply. It is just a different way of wording that section.

If you wish further clarifications, I will have to get Mrs Marland here.

Ms Poole: No, I am quite satisfied with Mr Jackson's explanation.

Motion negatived.

The Chair: Returning then to the government amendment, subsection 21(5) as printed, questions or comments?

Ms Poole: I am pleased that the government has rethought its original position, which was that it was going to tie it to small buildings and large buildings, and that it has settled on two years as the number of years for carry-forward.

I will just reiterate my disappointment that the government has not seen fit to look at the extraordinary cases, and in some cases the not so extraordinary cases, the quite ordinary cases of the older buildings which may well require more than the two years of carry-forward. I think the effect of this is going to be that instead of a landlord doing a significant amount of the work at one time -- in fact because the landlord has done the work at that one time, he can get a better price break on materials, labour and other construction material. Second, it would prevent the scenario where every three years the tenants are subjected to more construction. It would basically get a lot of the hassle and the inconvenience of construction out at one time and then allow for a number of years of carry-forward.

The government amendment, however, does not allow for that. It is quite restrictive in that regard. I think when you consider that some of the repairs will be fairly extensive and when you consider the options, that the landlord could do all the repairs at one time and phase it out over five years or, in the alternative, the landlord could do the repairs, phase it out over three years of rent increases and then have to go back and do another bout of construction and ask for another rent increase, all you are really doing is making sure that tenants are more inconvenienced, suffer more hassle and end up paying more for the work that is being done because you are going to parcel it up in smaller lots.

I really regret the lack of foresight by the government in limiting the carry-forward to the two years. I think it would certainly not have harmed the rent stability they are talking about to have allowed a longer period of carry-forward. I am just disappointed that they did not consider that.


Ms Harrington: There is one point Ms Poole has not related in the equation we are dealing with here between the costs by the landlord for the upkeep of the building and the payment of the tenants involved here, that this legislation is a balance between allowing protection for the tenants and the cost of repairs for the landlord to be shared by the landlord and tenants.

That means that not all repairs are to be passed through to the tenants. There is a financial responsibility on the part of the landlord, whereas in the previous legislation, the RRRA, all repairs could be passed through. That is not the intent of this legislation. It is a fundamentally different concept, that if the landlord wants to do repairs, necessary capital repairs can be shared with the tenants to some extent but the landlord also has responsibility.

You are saying he cannot do them. Yes, he can. He can use some other funds of his. He has responsibility as well as the tenants. We believe the idea of allowing, as you mentioned, a three-year period will encourage not the bunching up which we have seen in the past but a long-term plan for what needs to be done with these buildings.

Ms Poole: Three years is not a long-term plan, Ms Harrington.

Ms Harrington: I understand that. What we are saying is that a landlord will realize how much he can do over the next period and then will look beyond that and try to measure things out and spread them over a period of years instead of trying to do all the repairs at one time where in the past, under RRRA, he could pass all that through that way and increase his rents to some usual amount which exceeded the guideline by quite a bit.

Ms Poole: I wish Ms Harrington had not muddied the issues by talking about necessary repairs and non-necessary repairs. That has absolutely nothing to do with what we are talking about. When we were talking about having an extended carry-forward, it was for necessary repairs as deemed under your legislation. A cap would still be in place so that tenants would receive the stability you have said you want. The only thing you have prevented by limiting the amount of carry-forward is allowing the construction to occur at one time and be phased out in rent increases over a number of years.

You have said: "Do construction. Have a couple years and do more construction. Do a couple of years, do more construction, another couple of years." That is not really accomplishing anything. All it is doing is putting the tenants and landlords to extra aggravation by having to go through rent review, by making tenants suffer the inconvenience and hassle of having constant construction instead of being able to have it once in five years. You are saying that the landlord would have the construction, get his three years of phase-in and in the third year start construction for the next three years. You are not protecting the tenants any more. I just cannot see why you are objecting to extending the carry-forward.

Ms Harrington: Because the landlord has to have financial responsibility in this as well. It is not necessary to pass everything through to the tenants.

Ms Poole: Mr Chair, I would say to the parliamentary assistant, through you, that we live in a world of reality, or at least some of us try and maybe not so successfully some days. But in that world of reality does the parliamentary assistant really believe that if a landlord has the option of cost pass-through during a three-year period and then to go back, do more construction and have a further cost pass-through, he is instead going to do a five-year plan and put part of the money through cost recovery for the tenants and the other part he is going to do himself? No. It does not address that concern at all.

That has not got anything to do with this equation and it is not going to encourage landlords to put their own money in. They are just going to delay doing the repairs until such time as their previous rent increase has gone through, because the original premise when rent review was brought into this province was that the market would be constricted. It was brought in by a party that does not believe in constricting a market, but it was brought in on the quid pro quo that there be cost recovery and it was brought in on the understanding that what was to be prevented was rent gouging.

Ms Harrington: I disagree.

Mr Mammoliti: Are you saying they are neglecting the buildings? I hope that is not what you are saying.

The Chair: Mr Mammoliti, I can put you on the list.

Ms Poole: I have several other suggestions of where you could put Mr Mammoliti, Mr Chair, but it might be inappropriate.

The Chair: No. We will not do that.

Ms Poole: We will not do that, okay.

Mr Jackson: Even if he was there he would not get a cabinet post.

Mr Mammoliti: It would be a lot easier to put you there.

Ms Poole: Mr Mammoliti, you want me to go to cabinet? Thank you. One of the many places -- Mr Chair, I quite lost my train of thought, but I think what I was trying to point out is that when rent review was brought in, it was brought in as a tenant protection against rent gouging and that is why full cost pass-through was allowed. The government has said it wishes to limit the cost pass-through in order to protect tenants and the stability of their rents. All I am saying to the parliamentary assistant is, why would they put in a provision limiting the amount of carry-forward when it does not provide any more stability? It is not going to mean that one more landlord would put more of his or her own money in. All it does, like I say, is increase the number of times they will have construction, increase the number of times the tenants' association has to go to rent review and fight an application, increase the amount of bureaucracy that is necessary, and what have you accomplished by it? What exactly have you accomplished?

Ms Harrington: Ms Poole, I do not think we are going to accomplish any meeting of minds here. It is just astounding to me that the opposition cannot understand that this government does not believe in full cost pass-through to the tenants.

Ms Poole: At least we figured that out, Ms Harrington.

Ms Harrington: If you have X number of years that it can roll across, that the cost of repairs can go on and on and on, then that is full cost pass-through. That is not what we are doing.

Ms Poole: I ask the parliamentary assistant, looking at a five-year period over which there would be a total of a 15% rent increase above guideline, if the landlord is to do the repairs in one fell swoop at the beginning of the five-year period, and we have a five-year period over which these rent increases are phased in year by year and the full costs of the landlord are allowed to go through that, what is the difference between that scenario where the landlord does the same thing for a three-year period and then in the third year does more repairs, more construction, goes back to rent review and gets full cost recovery for the next three years?

We are not talking about a difference in cost recovery. The cost recovery is going to be the same. If you are talking about the Residential Rent Regulation Act, you are right, because the penalty was in the first year. There was a 1% deduction of the rents off the landlord's application for the first year they applied. This tended to encourage landlords to front-end-load everything to that application. But we are not talking about that. The 2% that a landlord must justify applies in every single year regardless of whether the landlord goes once or twice to rent review. There is no difference financially.

All that is of difference is in making sure there are fewer times the tenants have to endure construction, fewer times the tenants have to go back to rent review and fight an application, fewer times the landlord has the expense of putting in an application. In the end, it is not a matter of the tenants paying more rent. The tenants would not pay one penny more rent if they had a four-year carryover, making five years total, over the situation where a landlord can apply, have three years, and then go back for additional money. I do not know quite where you think --


Ms Harrington: Our assumptions that we are starting from are different.

Ms Poole: Yes, Mr Chair, my assumptions, I think, are correct, and I do not think the parliamentary assistant's are.

Ms Harrington: I believe your assumption might be that whatever cost for this repair that we are discussing, you are saying you are going to break that up and do the maximum amount in the first three years and then go back to the rent control officer and go for more above-guideline increases for that same repair.

Ms Poole: No. He did the repair, a different repair.

Ms Harrington: I am saying that if you are doing a repair, the maximum it can go is that three years. If the landlord is going to do that, he does not get continuous pass-through. He must share in the cost of that.

Ms Poole: Perhaps it would help the parliamentary assistant if I gave her a specific example. I had a building in my riding, 88 Erskine, which had a 25% rent increase, so it was 20% above guideline. It had not had a rent increase above-guideline for something like 11 or 12 years. The landlord went on a major binge of renovations and capital repairs, and I think most of the things, not all, but the vast majority of the things in that 25% would have qualified under your list of necessary repairs. They replaced the elevators which were 25 years old, put in new thermopane glazed windows, changed the heating system, put in a new security system. We are not talking luxury-type repairs by and large.

If you take that same scenario -- let's make it easier. Let's say it was 15%. You have a landlord who has this list of repairs that, if it was all added up, would come out as a 15% rent increase. Under your scenario the landlord would do 9% above-guideline worth of repairs over the three years. Then the landlord would begin his construction anew and put the further 6% in and instead of having in the five-year period one set of construction, one rent review application, one battle with bureaucracy and being able to phase it out over those five years, the landlord has doubled up on what is happening.

I put to you that it is not only the landlord, it is the tenants, because tenants do not like fighting rent review applications, and it is going to be no easier under your system, I can tell you, than it was under the Liberal system. This is just as complex, if not more complex. It has with all the amendments 130 clauses, over 200 amendments. It is going to be extremely difficult for tenants.

Mr Jackson: Wait until you see the regulations.

Ms Poole: And we have not even talked about the regulations. It is going to be extremely complex for tenants to understand, and you are saying tenants have to go back and fight twice.

Under your legislation the way it is now, and I would like Ms Parrish to correct me if I am wrong, my understanding is there is an application the first year and then the landlord has to go back in the second and third year of carry-forward and again show that the repairs have been done and nothing has changed in the meantime. Is that correct? There is only one application?


Ms Poole: Even better. Thank you. That is very helpful information for me. This means instead of a landlord and tenants going once, they now have to go twice, yet there is no difference in the amount of rent the tenants would pay over that five-year period because the cap is still in effect. The tenants would end up paying the same rent but they have all these hassles they have to go through twice. I really do not see the justification for limiting the cost pass-through.

Mr Owens: Earlier in the week or late last week you mentioned a study, maybe on another issue, that the ministry had done with respect to cost recovery and the amount of time required by landlords, and three years was found to be quite adequate. Did we talk about that? Maybe Margaret made a comment around that.

Ms Parrish: We talked at some length yesterday about whether three years was adequate. We talked about the sampling we had done, the total amount of money and so on. We discussed that at some length yesterday for garage repairs, because that was the item people seemed to be quite concerned about as possibly requiring more money than was available in the system.

We have also tabled with the committee and discussed in the past material we prepared that showed how much money is available for capital in this system with a two-year carry-forward. We estimated the total amount of money for capital repairs needed over the next 10 years was between $4 billion and $7 billion, and this system actually generates about $8.7 billion over the same 10-year period. We talked about the sampling we had done which showed there were very few repairs that were likely to need more than this much carry-forward. There are cases that occur in which there would not be complete recovery, but in most cases, the extra carry-forward period, the first year plus two more years, is sufficient to pay for the repair.

Mr Owens: That leads me to my comment generally on the amendment and the particular philosophy that has come from members opposite. If I was to go out and make an investment, whether it is in stocks or whatever -- if I was not a parliamentary assistant, I could do things like that -- and there were costs associated with the maintenance of that investment such as brokers' fees, financial advice charges etc, other than perhaps through some tax loopholes, there is no method of recovery of costs for people doing business.

I see the member for Eglinton looking almost as if she is going to pass out here. I certainly hope it was not anything I said. All of a sudden we want to ensure there is no cost of doing business, there is no cost of maintaining the investment, which is exactly the kind of philosophy the member for Eglinton has urged we take in terms of the construction example.


In terms of the construction example, how many buildings are there out there that undertake more than one major capital project per year? If you know, tell me, because I do not know. It does not make sense, from an investment point of view, to have that kind of capital expenditure occurring at a time when there is concern for revenues. If capital construction is going to take place, I would suggest that it would happen on a yearly basis whether the pass-through was here or not.

As I say, I do not understand why there is this necessity to feel we have to somehow prop up and ensure that the investment is at no cost to the investor while the investor profits from the rents collected on the buildings. I will certainly look forward to the response from the member for Eglinton.

Mr Jackson: Mr Chairman, since you did not rule that the parliamentary assistant was not off topic when she referred to when we were going to understand about pass-through, I wish to comment on that, because I think it is a very sensitive and timely point, germane to this section and appropriate to what several people in her government have said.

The report we received from the then Minister of Housing's first meeting with landlords in this province was that there would be none, absolutely zero pass-through. I just want to caution the parliamentary assistant to assure us that this is some sort of Waterloo for you. We have been told this in the past. We know the story that Mr Cooke, the then minister, capitulated because the reality of the enterprise of producing housing and maintaining it finally became like a light, cleansed his awareness and allowed your government to move on this issue.

Then we come to the Premier's announcement last night where he, in all fairness and honesty, said, "We want to hear from you about how we can get our economy going." I think Ms Poole has presented a very relevant motion to the very question the Premier asked last night. Given this government's track record of stating: "Here's a line. We're not going to move off it. Trust us; believe us; we're not moving" -- I would not even raise this, but the parliamentary assistant made such a point of it.

I do not know if you have read the Treasurer's document where he talks about, "We may have to gut and review non-profit housing" -- which is rental stock -- "in this province." Seniors' property tax grants and the drug plans -- he had a whole list, but he had right in there about all this non-profit, government-built housing he may have to gut. It begs the question that the government would be wise to reflect on this section at some length, given that it positions itself as an opportunity to do several things, which Ms Poole has most eloquently presented for all members of the committee.

Ms Poole: On numerous occasions.

Mr Jackson: Yes. But again the Premier said that he wanted to listen to people like Ms Poole and landlords and tenants who were saying --


Mr Jackson: No, he was talking to the entire province last night. This was not a caucus meeting where everybody agreed. I got all the news articles today, and we know that not everybody agreed, but he was talking to everybody.

The point is that certain renovations, certain necessary repairs will require differing degrees of pass-through. I wish to suggest to the parliamentary assistant that the Treasurer, I am sure, and your Premier, I am sure, will want to examine the implications of this legislation, as they will others. Since your absolute commitment, as enunciated at election time, you have capitulated on several fronts. You still have been able to keep together and retain some integrity of a bill based on some elements of your commitment to tenants.

However, the Premier was in fact trying to tell people about the need for everyone to participate in solutions, and one of the ailing situations in our communities is the necessary, required work in our buildings that cannot and will not be done as a result of this legislation. Those, as you know from the odd occasion when there have been rallies about this legislation and unionized tradespeople who lost large orders -- I mean these are the kinds of people who are hoping your government will continue in its pattern of capitulating on many of your commitments.

This may be an appropriate section for you to consider. A 20-minute recess to call the minister to see if she has had a change of heart in the last 24 hours may even be in order, but that is entirely your call as the parliamentary assistant. You never know. I sense that the Premier might even listen to some of these suggestions.

Ms Harrington: Mr Jackson, I prompted you to do quite a bit of thinking there. The point I would like to make a little more quietly is very simple, and that is our belief that the landlord as well as the tenant should be paying for these capital repairs. That is our position and that is what this particular part of the bill speaks to, I believe.

Ms Poole: I had a number of comments to make regarding Mr Owens's revelation. He gave the example of how others cannot pass on business costs, that they have to eat business costs. I was quite surprised that Mr Owens did not realize that in this legislation the NDP government removed the right of landlords to pass on the cost of doing business, that consultants' fees, lawyers' fees or anything of that nature were eliminated from this legislation by his government. When we talk about repairs to a building, they are not the cost of doing business. The repairs to a building are the cost of ensuring that the building does not crumble and that our aging housing stock is maintained.

When Mr Owens says that he cannot conceive that landlords would want to do more than one major capital project in a year, if you look at capital projects, normally landlords do a number at one time, because they do not want to go back to rent review every single year. They do not want to go any more than they have to. If they are putting in new windows, then it is quite likely they are also going to be doing the elevators, because for many of these buildings, particularly in the 20- to 30-year age range, most of the things break down around the same time and need replacing at around the same time. If you look at the amortization schedules for things such as elevators and boilers and things like that, they are all very similar. They break down around the same time.

Landlords want the best price for what they are doing. You get a better price if you have your repairs or renovations done at the same time. So it is not only conceivable but quite normal for landlords to do a number of repairs in the same year. They do not want their superintendents spending all their time supervising various projects in various years; they want to get it done and over with.


Mr Owens talked about the sheet presented by the ministry yesterday and said his understanding was that in most cases the carry-forward and the cap would be adequate to meet the needs. I would point out to him that this particular document tabled by the ministry referred to one item only, which was underground parking restoration. Because it was prepared for another reason, it was not even a very accurate one for our particular purposes. It gave us a snapshot. Quite frankly, where I felt it was completely lacking was in the buildings that have between 40 and 130 or 140 spaces. Definitely, those are the buildings where the cost of doing that underground parking garage may be very problematic as far as cost pass-through, whether there be sufficient funds to do it. But that is one item as well.

What happens if it is the boiler that has been breaking down and the landlord wants to replace it? As you know, that is a very expensive item. If the underground parking garage takes up all the allocation, then the boiler cannot be fixed. I think most tenants would rather have the carry-forward extended, and have the right to have that boiler replaced and the underground parking garage repaired at the same time. It does not make any difference to the tenants in rent increases whether that construction is done once or twice. It makes a difference to them in hassle, it makes a difference as far as having to fight a second rent review application, but it certainly does not make any difference to the amount of rent increase.

Along the lines of what Mr Jackson was saying, I would think the government would want to encourage the construction now. You would want to front-end-load the construction. As we heard through the Bill 4 hearings, people came and pleaded to this committee to change the legislation. The construction industry is reeling and it could do with a boost right now. What a boost that would be to say to landlords: "Do some of those necessary repairs that have to be done now rather than doing some now, some three years from now and some in six years. Get those people back to work."

I really do not see why the government is objecting to extending the years of carry-forward. It makes good business sense, it makes sense from a tenant point of view, it makes sense from the point of view of encouraging jobs in construction. Certainly it would be a good signal to the business community that this committee had listened in some way, shape or form.

I really hope the minister will rethink her position on this. I would be more than willing, if the parliamentary assistant and Ms Parrish would consider it, to stand down this section until tomorrow morning so we could see whether the minister will rethink her position on this particular section.

The Chair: Do I have unanimous consent to stand this section down? No.

Ms Harrington: No. The minister's position is very clear.

Mr Owens: Without wanting to belabour this any longer or confuse the member for Eglinton any further, I do take issue with her comments around my lack of realization that the consultants etc had been pulled out. Ms Poole has taken a very narrow view of what business expenses would be called and moves from business to the warm and fuzzy altruism, "It is not a business expense to maintain the building. It is to maintain the integrity of the building so tenants have a nice, wonderful place to live."

It is simply the property owner maintaining his or her investment, and that is a cost of doing business, to ensure that the building is there and functional, as well as providing housing for tenants. It is still an investment, no matter how you call it or how you describe it. It is a business proposition for an individual or a number of individuals to invest in property. It provides housing for individuals, but at the end of the day it is still a business investment, and there are expenses to doing business. There are expenses in all kinds of investment and that is the point I was trying to make.

Ms Poole: I am very pleased that Mr Owens took the opportunity to clarify what exactly he meant by the cost of doing business. I am very appreciative of the fact that at least one member of the NDP government understands that it is a business and it is an investment.

This is the government that released a paper called Housing Framework, which on page 55 made the astounding statement, "Some people are in the rental business because they want to make a profit." It quite floored me when I read that sentence. I thought: "This means that some must be in because they either don't want to make a profit or they're philanthropical. They just like to have people come live in their building." I could not quite figure it out at the time. I thought, "I have to reassess my views of this particular issue," because I thought most people, if not all people, who went into the rental housing market as an investment did it because they wanted to make a profit.

Mr Callahan: They want a write-off.

Mr Abel: That is a possibility too.

Ms Poole: It is quite refreshing to see that there is at least one member of the NDP government who is considering the fact of business and that it is an investment. But I would put it to the members of the NDP that right now that particular investment is on very shaky ground. We have had real estate agents and the Canadian Bankers Association and other presenters who have said that the value of these apartment buildings has devalued by some 25% to 50%. Estimates were as high as 50%, but certainly in the 25% to 35% range.

Mr Abel: The value of houses went down as well.

Ms Poole: The value of these apartment buildings went down not primarily as a result of the recession, because income-generating property is relatively well buffered from the recession by the fact that income-related properties are valued by the revenues coming in, as opposed to some of the things that might dictate what a house value would be. That is why, if you look at the 1981 downturn in the economy -- I am not sure we would call it a recession, but certainly the 1981 lull -- apartment values weathered that particular storm better by far than house values because the revenues stayed constant. That is what dictates the resale value of an apartment building.

When you talk about landlords and their investments, I think many landlords right now are just filled with despair. They are very frustrated and feel hostile towards what the NDP government has done. To many of them, this is their life savings. Most of the landlords in the province are small landlords. If you look at the statistics Ms Parrish --

The Chair: Ms Poole, I think we are wandering a bit. If we could come back to 21(5) --

Ms Poole: Are we? I was just trying to kill time until 5 o'clock.

Mr Owens: I thought we did not make that distinction any more between small and large landlords.

The Chair: Do you want to get on the list again, Mr Owens?


Ms Poole: I would say for the edification of some members of the NDP caucus that the distinction between small and large landlords has been made time and time again by the government and by members of the opposition. Landlords are different than buildings, by the way. I might stress that.

At any rate, what it comes down to is that this government wants to encourage people to maintain their investments, it wants to encourage landlords to keep up their properties, but if a building has devalued to a stage where the landlord has no equity in that building and in fact is in a loss position, I think it is somewhat naïve for the government to assume that landlords are going to put their own moneys into repairs. Cost recovery, therefore, becomes very important.

It appears unlikely that the government is going to bend on this particular issue since the parliamentary assistant has said they will refuse to stand it down for reconsideration by the minister. So I do not see any point in delaying the vote on this particular matter.

The Chair: The Chair has a question. I am concerned with the mechanics of this and I would just like Ms Parrish to explain the mechanics of the pass-through so all members understand exactly how this section works. For example, the landlord may have a 9% cost pass-through justified. I do not understand completely how the 2% that is within the guideline would be applied, how he would be able to justify 2% for the second and third year which may or may not be there in the second or third year.

Ms Parrish: If you want cost pass-through in your second year and you have made an application that justifies more than the 5% you would get in year one -- in your example about 4% more -- you have two choices. You can ask rent review services to issue a notice of cost pass-through and you can simply take the 4% in the next year. In this case you add 2% to the guideline and the tenants pay that. If you have an additional repair, say in the second year the landlord has an increase in taxes or another repair he is doing in that year and he wants to get the remaining 1% above-guideline, then he makes a new application and the notice of cost pass-through is not issued.

They have a choice in that particular kind of situation. They can either automatically take the increase they have been given under the previous application without any further application -- they do not have to apply in year two -- or if they think they can justify getting more and they still have room in their cap, they can apply and get more money.

Ms Poole: They could get that plus any new repairs.

Ms Parrish: Yes, any new repairs or extraordinary cost increases, taxes or heating, up to the maximum of 3% above-guideline.

The Chair: It is conceivable then that the landlord could be at rent control every year within the three-year period depending upon what additional expenditures he or she may have.

Ms Parrish: Yes. As in the current system, they can apply every year. There are some landlords who do apply every year. They can continue to apply every year. However, if they have taken their full cost pass-through -- let's take the scenario where the landlord has just applied for 15%. He is going to get 5% the first year, 5% the second year and 5% the third year. Then he cannot reapply in the second and third year. The carry-forward is simply issued because he has nothing left to apply for, but if he has some room left in his cap, he can apply.

The Chair: Using my example of 9%.

Ms Parrish: He would have 1% left in the second year, because he has taken 5% and he can carry forward 4%.

The Chair: But say it is 11% in the first year, because he has already done some capital work justifying the 2%?

Ms Parrish: If it was 11%, he would have completely filled up his cap in the second year. So he would not be able to apply until the third year, where he would have room left over in his 3% above-guideline cap. It would be 5% in the first year and 5% in the second. Then he has only 1% left over at that time, so he could reapply if he can justify more.

The Chair: Just to be clear, you are telling me that if in that second year something unpredictable happened in the building and he ends up spending 2% more, if he has not gone to rent review, he does not have the option of carrying the full amount through the three years?

Ms Parrish: If he has taken the full amount in year one or year two, he cannot apply for more. He has to wait and apply in year three for what he is spending in year three, because he is only entitled to 3% above guideline.

The Chair: Thank you. I think I understand that.

Ms Poole: Following from that -- and pardon me if this has been answered at some previous time -- with the 2% that has to be justified if a landlord is going for an above-guideline increase, at various stages of the Bill 121 hearings we seemed to be getting mixed messages, certainly from witnesses' perspectives if nothing else, about whether that 2% justification would have to apply under section 15. I think it is section 15 that lists the criteria for necessary repairs. When the landlord justifies the 2%, when he is going for an above-guideline increase, does that 2% have to be justified according to section 15?

Ms Parrish: Yes.

Ms Poole: If the landlord put in new carpeting, for instance, then that could not come out of the 2%. That would not apply to the 2%.

Ms Parrish: No. You are talking about a situation where the landlord is asking for an above-guideline increase?

Ms Poole: That is right.

Ms Parrish: He has to justify the full 5%.

Ms Poole: With regard to the type of repairs and maintenance that previously under Bill 51, the Residential Rent Regulation Act, were allowed and accepted as a legitimate expense, such as replacing the carpets, for instance, or fridges and stoves -- they are en suite so that is not a good example -- that type of expenditure, the landlords must use their own funds to pay for those things. If the landlord does not go for an above-guideline increase, he can use that 2% however he chooses, but if the landlord wants to do major repairs over and above this, which would lead to an above-guideline increase, the landlord is restricted by the type of repairs for which he could get a cost pass-though for the 2% guideline.

Ms Parrish: The bill indicates that if you want more than the guideline amount, you must do more: you must justify, you must get permission. Otherwise, what would happen in some cases is that tenants would pay indirectly for those very unnecessary repairs they do not want. Landlords would use the 2% for the things the tenant does not want such as microwaves or marble or whatever, and then say, "But if you want your elevators fixed, then you have to have this 3%."

The view is that if landlords apply above-guideline, the policy the government feels was appropriate would be that they would have to fully justify what they were asking for. If they were not asking for any additional money, other than the guideline, the quid pro quo essentially was that there would be a lesser requirement of justification. However, the landlords must still meet basic standards, must not have any outstanding work orders and of course, if they do have inadequate maintenance, are vulnerable to an application by tenants.


Ms Poole: In other words, the ministry is using that particular lever to discourage landlords from applying for above-guideline increases, because it says to the landlord who does not do anything: "You can spend the 2% however you want. You can take it for profit, you can put in new carpets, you can give it away to charity. But if you go for an above-guideline increase, then in that particular case you have to justify it. You have to justify not only that it was spent on capital repairs, but on the very specific capital repairs outlined in the legislation." What the ministry has basically done is say, "We won't make landlords justify it unless they go to rent review."

Ms Parrish: I cannot speak about the issues of discouragement or incentive, as I think those are comments beyond the province of a civil servant. What I would say is that the view of tenant groups was that all capital should be justified and that landlords should not get anything except justified capital. I will not go into the position of landlords. You have all heard that and you are certainly very knowledgeable about the various positions.

I guess the compromise approach has been that if landlords are taking only the statutory guideline, they do not justify. It is a pragmatic response in a sense, that if you are not asking for extra, the rules might be a little less stringent. Where a landlord wants to take advantage of the ability to get more money, it was felt appropriate that the money should be channelled to the area of necessary repairs, which almost everyone has indicated is where people want that money to go to in order to avoid the problem which has occurred under Bill 121, that tenants have been paying for repairs they neither want nor view as necessary. This is essentially a pragmatic approach to find a medium ground to very divergent views on the issue of capital repairs.

Ms Poole: Probably all this discussion has become rather moot, because I do not think very many landlords are going to go to rent review for above-guideline increases, as I do not think there are very many landlords who are going to bother to do the repairs at all.

Mr Owens: That is not true.

Ms Poole: Just look at what you have said about the landlord who does what we have all agreed in this legislation is classified as necessary, justifiable repairs. The landlord who does this and goes to rent review first of all has to face the possibility of a rent penalty, face a possible reduction of maximum legal rent. They cannot use the 2% for non-eligible capital, as landlords who do not go to rent review can; they are restricted to the list in section 15.

They have been told there is a major change in attitude by the rent officers. I think Ms Harrington spoke quite eloquently, and I know Mr Mammoliti did, about the change of attitude, and how the attitude was going to be the big difference with the rent officers.

Ms Harrington: Give credit to the attitude of the landlords as well. I think you are denying they are reasonable.

Ms Poole: When all is said and done, I do not see why a landlord wants to take the risk of putting major moneys into a building, particularly when he is going to have trouble from financial institutions in getting the loans to begin with, particularly when the buildings have been devalued. They do not have much equity in many cases to begin with. When Ms Harrington makes the comments she does about underselling the attitudes of the landlords of this province and not giving them the credit that is due, I am saying the landlords of this province are probably pretty smart.

Ms Harrington: I hope they are well intentioned, as well.

Ms Poole: Not to say they are not well intentioned, but you reach a certain point of frustration and irritation and despair in some cases that you just give up. I think there are a lot of landlords who figure they can outlast this government, which may not be all that hard. They will wait for a fairer government, which again will not be all that hard, that they think will have a fairer system, that will be fair to tenants and fair to landlords.

Ms Harrington: Just one point. A 6% increase in 1992 is a guaranteed increase, is it not, in what their income will be on their buildings? When you think of what the economy is like in this province, there are not too many business people who are guaranteed a 6% increase in their businesses.

Ms Poole: Just in response to the parliamentary assistant's comments, I am not sure I could say in this very difficult economic climate, where there may be a number of tenants who cannot pay the rent and leave the building with major rents unpaid, that these increases are guaranteed to landlords.

Ms Harrington: That is a good point.

Ms Poole: I think landlords will face their own set of economic realities, just as tenants will, and other people will, in these dire economic times.

Mr Chair, do you have anybody else left on the list? Could we make a bargain that if we took the vote we could adjourn and not go on to a new section? I do not think Ms Parrish is going to last. I think she is feeling sicker by the moment. She sounds incredibly articulate, given the difficult circumstances.

The Chair: Shall subsection 21(5) carry?

Mr Abel: I would ask for an adjournment.

The Chair: Twenty minutes? The committee will take 20 minutes. Ten?

Mr Jackson: You can call an adjournment or call the vote, Mr Chairman.

The Chair: They have the right to ask for 20 minutes, but the committee adjourns at 5. I suggest we have the vote at 10 o'clock tomorrow morning.

Mr Jackson: You will entertain a motion at 10 in the morning?

The Chair: No, the question has been placed.

Mr Jackson: There has been a call for a delay of 20 minutes.

The Chair: Yes, and the committee adjourns at 5 o'clock.

Mr Jackson: So you are ceasing that motion and you are adjourning?

The Chair: The vote will be taken at 10 o'clock tomorrow morning.

Mr Jackson: The committee shall reconvene at 10 in the morning.

The Chair: Exactly, Mr Jackson, and I appreciate your help.

Mr Jackson: The first order of business cannot be the vote.

The Chair: It will be.

Mr Jackson: Then deal with this motion.

The Chair: The committee is adjourned until 10 o'clock tomorrow morning. The vote on this section will take place at 10 o'clock tomorrow morning.

The committee adjourned at 1649.