May 11, 1998

 To:Urban Environment & Development Committee 

From:Commissioner of Urban Planning and Development Services

Subject:City Powers, Policies and Procedures re: the Conversion to Condominium and Demolition of Rental Housing before and after the Proclamation of the Tenant Protection act.

To advise Council of the status of the proposed Tenant Protection Act and the repeal of the Rental Housing Protection Act, and the implications these changes will have with respect to the municipal approval of proposals to convert and/or demolish rental housing.

Funding Sources, Financial Implications and Impact Statement:

There are sufficient resources to undertake the work within the budget submitted by the department.

Recommendations:

It is recommended that:

(1)Council direct the Commissioner of Urban Planning and Development Services to review and report back by early fall of 1998 on appropriate City-wide policies and procedures respecting condominium conversion and the demolition of rental housing;

(2)Council adopt, as an interim policy until such time as the report on recommendation (1) can be considered, that:

(a)when the Tenant Protection Act comes into effect, staff report to Community Councils on condominium applications that involve the conversion of rental housing and Community Councils hear deputations and make recommendations to City Council; and

(b)the Clerk give notification of the meetings referred to in (a) by placing an advertisement in a community newspaper and that in addition, the applicant be requested to notify the tenants of the building about the meeting referred to above.

(3)Council amend section 3.(1) of By-law No. 61-95 (The Municipality of Metropolitan Toronto) by adding a new subsection (3) which reads:

The power delegated to the Commissioner by section 2 does not include the authority to make decisions on applications which involve the conversion of rental housing to condominium., to continue to provide Council with the decision making authority on applications to convert rental housing to condominium;

(4)Council request the City Solicitor to review the former City of Torontos special demolition control legislation and report back by June 1998 to the Urban Environment and Development Committee on the feasibility of amending the legislation in order to extend its provisions to the other former municipalities in the new City; and

(5)the appropriate City officials be authorized to undertake any necessary action, including preparing and introducing any necessary bills, to give effect thereto.

Background:

In 1997 the Provincial Government introduced Bill 96, the Tenant Protection Act (TPA). According to Provincial staff, the TPA is expected to come into effect by the end of May. Among other things, the TPA will repeal the Rental Housing Protection Act (RHPA). The RHPA allows municipalities to regulate the demolition and conversion of rental housing to other uses such as condominium, as well as the renovation and severance of rental properties. However, the TPA does not offer similar powers to municipalities. Instead municipalities will have to rely on other means provided by legislation such as the Planning Act and the Condominium Act, or other special municipal legislation, to preserve the rental stock.

At present, rental housing serves a very important role in the new City, providing 52% of the total housing stock. The current rental vacancy rate for the City is quite low at only 0.8%, and virtually no new affordable rental housing is being constructed.

There is serious concern about the potential loss of rental housing which may result following the proclamation of the TPA. Inquiries by landlords to planning staff respecting conversions and demolitions have increased significantly over the past several months.

This concern about the upcoming change in rental legislation and the subsequent impact on the rental stock has been expressed by some members of Council. At its meeting on March 4, 5 and 6, 1998, Council dealt with two motions respecting the RHPA and TPA. With respect to public meetings for applications under the RHPA, Council adopted Councillor Browns motion that:

 Now therefore be it resolved that each Community Council is delegated the authority to give notice and hold any public meeting regarding applications under the Rental Housing Protection Act as required by Section 11 of the Act in respect of land within the part of the urban area it represents and that the Urban Environment and Development Committee is delegated the authority to hold such meetings in respect of land that is within the geographic area represented by more than one Community Council; and be it further resolved that this delegation is an interim measure, to be reconsidered once the Special Committee chaired by Councillor Miller has reported to Council regarding Community Councils and Councils Procedural By-law.

As well, Council referred Councillor Chows motion to the Urban Environment and Development Committee the following motion:

Now therefore be it resolved that the work of the Urban Planning and Development Staff Team dealing with the development of a new condominium conversion policy and other measures to preserve the Citys scarce supply of rental housing be fast-tracked; and be it further resolved that in the interim, all Community Councils strictly apply their existing condominium conversion and demolition control policies/by-laws where applicable, in order to minimize the loss of affordable rental housing units.

In response to these concerns and in anticipation of the proclamation of the TPA, staff from Urban Planning and Development Services have been undertaking the necessary research for the development of more consistent policies and procedures on the subject of condominium conversions and demolition control for the new City. The review will include an examination of the housing market, housing production and affordability as they relate to condominium conversions and demolitions of rental buildings. Consistent with Councillor Chows motion, staff will fast-track this work and report to the Urban Environment and Development Committee of Council by the fall of this year. Until new policies are in place for the new City, the existing condominium conversion and demolition control policies of the former municipalities will remain in force.

This report provides a discussion of the powers available to the City before and after the enactment of the TPA. It also suggests several actions that should be taken to improve the Citys procedures with respect to condominium conversion and demolition control immediately after the TPA is proclaimed. These changes would at a minimum, ensure that the current municipal approval process for dealing with condominium conversions under the RHPA would essentially remain the same after the TPA is in force - at least until new City policies are in effect.

Discussion:

Condominium Conversions

a) Current Municipal Powers and Procedures under the RHPA

At present, under the RHPA, the conversion of rental housing to condominium involves two approvals; council approval for the conversion application and for the plan of condominium application. The RHPA delegates approval authority for both of these applications to the area municipalities. The RHPA: (a) establishes criteria which a municipal council must consider in reviewing a conversion application; (b) requires the applicant to notify tenants; (c) requires the municipality to hold a public meeting; and (d) allows any person to appeal councils decision to the Ontario Municipal Board (OMB).

With respect to (a), the RHPA provides that a municipality shall not approve a condominium conversion application unless the council is of the opinion that the proposal does not adversely affect the supply of affordable rental housing in the municipality. The provisions also allow the applicant the option of agreeing to replace the converted units with those of a similar quality and rent, and to providing accommodation for the existing tenants in either the replacement units or elsewhere. The municipality may approve the application with or without conditions and enter into agreements imposed as a condition of approval.

The former area municipalities have used the RHPA in combination with section 51 of the Planning Act (which deals with approvals for subdivision and condominium) and their official plan policies to regulate condominium conversions. The RHPA was specifically enacted in 1986 to provide municipalities with the means to preserve the supply of rental housing by restricting certain activities such as conversions and demolitions. Between 1986, when the RHPA came into force, and 1996, Ministry of Municipal Affairs and Housing data indicates that only 690 rental units were approved for conversion in the new City (compared to a total of 13,433 units throughout the Province).

Until the TPA comes into force, condominium conversion applications will be processed pursuant to the RHPA which requires a public meeting and City Council making a decision. In its adoption of Councillor Browns motion, Council has delegated to Community Councils the responsibility for holding statutory public meetings.

b) Municipal Powers and Policies after the TPAs Proclamation

The TPA provides sitting tenants, in a building being converted from rental to condominium, with indefinite tenure as their tenancy cannot be terminated if they choose not to purchase the unit. Sitting tenants may remain in the unit subject to a number of conditions, such as their ability to pay rent increases, which may be higher under the new system. It should be noted that any future tenants of converted buildings can be evicted for the owners own use. Also, a sitting tenant has the right of first refusal to purchase the unit, except where the offer to purchase involves more than one unit. As well, there are no conditions on the purchase price of the units. While there are some limited protections for tenants under the TPA, the legislation does not require tenants to be notified of a conversion proposal, that a public meeting be held, or provide appeal rights.

The key difference between the RHPA and TPA is that the latter piece of legislation removes the explicit authority that was contained in the RHPA which required municipalities to protect rental units. Following the repeal of the RHPA, condominium conversion applications will be processed pursuant to other legislation and policies (i.e. the Condominium Act, Planning Act, and individual condominium conversion policies of each of the former municipalities).

Section 50 of the Condominium Act makes section 51 of the Planning Act applicable to condominium applications. When considering a request for a draft plan of condominium in accordance with section 51(24) of the Planning Act, regard shall be had to various matters including:

-the health, safety, convenience and welfare of the present and future inhabitants of the municipality;

-whether it is premature or in the public interest; and

-whether the plan conforms to the official plan.

In addition, the Planning Act requires municipalities to have regard to matters of provincial interest such as the adequate provision of a full range of housing when carrying out their responsibilities.

All of the former area municipalities, with the exception of Scarborough, have specific official plan policies regarding condominium conversions. In addition, four of the municipalities incorporate a vacancy rate as part of their policy to act as a benchmark for considering approval of conversions. The existing official plan policies are summarized as follows:

Former Toronto -conversion of duplexes, triplexes and all other buildings originally constructed to provide one or more rental apartments is premature until the vacancy rate is 2.5% in Metro (new City);

Former Etobicoke -conversions are not permitted unless the vacancy rate exceeds 2% in the Housing Districts (Etobicoke has three Housing Districts);

Former East York-conversions are not permitted unless the vacancy rate is 3.0% in East York;

Former North York-generally, conversions are not permitted unless there is a vacancy rate of 2.5% in North York; and

Former York-refers to the RHPA and provides that the vacancy rate in York will be considered for conversion applications.

Former Scarborough-no official plan policy

As there is no official plan policy in the former municipality of Scarborough, applications will continue to be reviewed in the context only of the criteria set out in section 51(24) of the Planning Act.

The Metropolitan Toronto Official Plan encourages the preservation and maintenance of existing rental housing but does not have a policy specific to conversions. In anticipation of the proclamation of the TPA and repeal of the RHPA which would result in the Metro Commissioner of Planning being the approval authority for conversions, Metropolitan Council, in August 1997, adopted an interim policy that it supports the area municipal councils Official Plans and policies restricting the conversion of rental housing to condominium. This was intended to provide guidance for the Commissioner in his consideration of conversion applications submitted pursuant to the TPA.

c) Municipal Procedures after the TPAs Proclamation

At present, Planning Act regulations delegate condominium approval authority to Metro Toronto. The former Metropolitan Council sub-delegated approval authority for plans of condominium and subdivision to the Commissioner of Planning through By-law No. 61-95.

This by-law remains in effect.

The conversion of rental housing, however, should be treated differently than other condominium applications. Conversions are not a straightforward administrative matter, but represent unique situations which have varying impacts on both tenants and the rental stock. Under the RHPA such conversions had been the subject of public hearings and deliberated by Council. In order to continue the current procedure of allowing public debate and Council consideration, it is recommended that the delegation by-law should be amended whereby Council retain the authority to decide on condominium applications that involve the conversion of rental housing to condominium.

Another issue concerns notification of conversion applications. As the TPA does not deal with such applications, it does not require tenants to be notified of a conversion proposal, a public meeting or provide appeal rights. Therefore, it is in the Citys interest to consider other means which may be used to provide public input, notification and appeal rights.

The Planning Act does not require a public meeting for a plan of condominium application. However, as condominium conversions are a matter of general public interest which effect the local housing market and affect sitting tenants, it would be appropriate to provide an opportunity for public input on plans of condominium that involve the conversion of rental housing. This report is therefore recommending that Community Councils be required to hear deputations on conversion applications at their meetings. This would facilitate public input and provide a forum for advising tenants of their rights. When the conversion involves an official plan amendment, the statutory public meeting for the amendment and meeting on the matter of conversion should be held at the same time.

The Planning Act does not require tenants to be notified of a condominium application, including the conversion of rental housing. While several official plan policies in the former municipalities require tenants to be notified of a proposed conversion, others do not. Therefore, under existing circumstances the first time tenants in certain areas of the City may discover that their unit is intended to be converted is when they are notified of an offer to purchase the unit. To maintain consistency and ensure tenants are properly informed, there should be common notification procedures. It is also important that tenants be fully aware of the application and able to exercise their right of appeal on any decision made respecting a conversion proposal. As such, we are suggesting that Council should adopt as an interim policy that the Clerk shall give notice of Community Councils meetings on applications to convert rental housing to condominium.

At present the RHPA requires that certain detailed information on a conversion proposal be included on the application form submitted by the proponent. Among other things, the information pertains to the existing and new building characteristics, and any proposals concerning tenant relocation and interest in purchasing units. After the RHPA is repealed, this information will not automatically be required through other planning approvals. The present condominium application requires only limited information on conversions. It would therefore be appropriate for staff to request applicants to provide additional information to properly evaluate condominium conversion applications. At this time, it is suggested that the details on the following matters be provided by future condominium conversion applicants, after the TPA takes effect:

Rents in the property listed by unit number and type (bachelor, one bedroom, etc.);

 .Estimates of selling prices for condominium units;

.Whether the tenants in possession of the units have been notified of the application for a plan of condominium;

.Number of rental units that sitting tenants units have indicated in writing that they wish to purchase as condominium units; and

.An indication of the nature of any renovations, repairs or changes that are to be done in conjunction with the condominium conversion.

Demolition Control

a)Powers and Procedures under the TPA

Following the proclamation of the TPA, municipal councils will no longer have the authority under the RHPA to require an owner to apply to a municipal council for approval to demolish rental housing. This means that City Council will have to rely on their powers under Section 33 of the Planning Act (respecting demolition permits), and in the case of the former City of Toronto, other special legislation (City of Toronto Act, 1984) when dealing with demolition applications.

All of the former municipalities in the new City, with the exception of Scarborough, have made use of section 33 of the Planning Act to designate all of their respective jurisdictions, or in the case of Etobicoke specific sites, as demolition control areas. As a result of such a designation, no person can demolish a residential building in these former municipalities, unless Council issues a demolition permit. Council, however, is required to issue a demolition permit where a building permit has already been issued for the property.

In addition, the former City of Toronto has obtained special legislation from the Province to deal with demolitions involving six or more dwelling units. These powers permit the former City to refuse to issue a demolition permit for up to one year, thereby offering Council more time to consider other ways of preserving the property, or relocate the tenants. Under this special legislation, Council also has the ability to acquire and maintain the property for residential use.

This special legislation could conceivably be amended to cover the entire new City, and would offer Council an additional tool to regulate the loss of rental housing due to demolition. At this point it is suggested that the City Solicitor report on the feasibility of extending this special legislation to encompass the whole of the new City.

Conclusions:

At present, and until such time as the TPA comes into effect (end of May according to Provincial staff), applications to convert rental housing to condominium will continue to be processed pursuant to the RHPA which involves a public meeting, and Council making the decision.

In the near future, when the TPA comes into effect, the RHPA will be repealed and the City will have to rely on existing official plan policies within each of the former municipalities and the condominium approval process (section 51 of the Planning Act) to regulate conversions. The change also eliminates the statutory requirement for a public meeting and results in the former Metropolitan Commissioner of Planning being responsible for approving conversion applications. As conversions affect the housing market and tenants, it is recommended that, as an interim policy, Council direct (a) Community Councils to hear deputations on conversion applications and make recommendations to City Council, (b) the Clerk to issue notice of Community Council meetings to consider condominium conversion applications and that the by-law which delegates condominium approval to the Commissioner of Planning be amended to require that conversion applications be subject to Councils approval.

Likewise in the immediate future, to control the demolition of rental housing, the City will have to rely on existing official plan policies and section 33 of the Planning Act. In the case of the former City of Toronto, special legislation concerning the demolition of rental buildings may be used.

To develop a more consistent approach for the new City, staff have initiated a review of the existing, policies and procedures relating to condominium conversions and the demolition of rental housing. It is expected that a report outlining the proposed policies will be submitted to Council by early fall of this year.

Contact Name

Paul R. HamiltonJohn Gladki

Metro Hall Office (392-8126)Toronto City Hall Office (392-7186)

Reviewed by:

Paul J. Bedford Virginia M. West

Executive Director and Chief PlannerCommissioner of Urban Planning and

City Planning DivisionDevelopment Services

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