August 24, 1998
To:Urban Environment and Development Committee
From:Commissioner, Urban Planning and Development Services
Subject:Information regarding Vital Services in Rental Residential Properties in the
City of Toronto
Purpose:
Report submitted in response to a request from Council for information on the anticipated
actual financial loss from the provision of vital services when necessary under the current
legislation; and the ability of Toronto Hydro and other essential services to provide the
continuation of services under the same conditions as were previously applied to the "Urgent
Hazard Program" by the former City of Toronto (under the former City of Toronto Act).
Funding Sources, Financial Implications and Impact Statement:
Enacting a Vital Service By-law would require reinstating funding of $120,000.00 per year.
An amount of $60,000.00 was cut from the 1998 budget to reflect mid-year cancellation of
the programme as approved in the budget process. In addition, funds up to $900,000.00 per
year in the peak years could be required for payment of utility bills, with no assurance that
these funds would be recovered by the City.
The projected funding of $120,000.00 per year for administration of a Vital Services By-law
for the entire city is the same amount as expended for the former City of Toronto. It is
anticipated that should a Vital Services By-law be deemed necessary, it could be written
with associated operational processes and policies that would reduce administrative costs, by
having some of the administration carried out by the utility companies, or having them cover
a portion of the costs.
It should be noted that the new legislation would continue to allow a municipality to have
rents directed to the City until the debt is repaid. This rent collection process would likely be
costly to administer.
Recommendation:
That this report be received as information.
Council Reference/Background/History:
The former City of Toronto had an "Urgent Hazards Programme" (established under the
authority of the City of Toronto Act, 1936) , under which Utility bills which were in arrears
to the point where the Utility company planned to cut supply would be paid by the City, and
a lien registered against the property. This lien allowed for recovery of the funds as
municipal taxes. In the 1998 budget process, funds for administration of this programme
were not provided. None of the other former municipalities had such programmes. While the
intent of the programme was to protect persons at risk, there is a belief that it had evolved
towards acting as a tool of the utility providers for bill collection, or a lever in landlord
tenant disputes, rather than its specific intended function.
Following submission of a report to the Urban Environment and Development Committee
and considered by Council at its meeting of July 29, 30 and 31, 1998, I was asked to provide
information as to the financial impact on the City if a Vital Services By-law were enacted
City wide, as a replacement for the Urgent Hazards Programme, and on the ability of
Toronto Hydro and other essential services to provide continuation of services.
Comments and/or Discussion and/or Justification:
As a Public Utility, Toronto Hydro has by way of Section 31 of the Public Utilities Act the
power to establish a lien on a property with outstanding bills. Recovery of the funds by
Toronto Hydro under that legislation has the same priority as municipal taxes.
Consequently, Toronto Hydro has in that regard for the entire present City of Toronto,
power equivalent to that available to the former City of Toronto. Toronto Hydro could
establish a bill collection process for themselves which would virtually guarantee recovery
of funds, and would not require outlay of funds by the City. This would, of course, require
that Toronto Hydro establish a policy that they would use this process as an alternative to
cutting of power in those cases where cutting the power would put vulnerable persons at
risk.
Only the former City of Toronto had an urgent hazards programme. While circumstance
may have arisen regarding cutting of utilities in other former municipalities, appropriate
mechanisms to deal with these circumstances were generally applied. As previously
reported, measures exist in the current (and draft harmonized) Property Standards By-laws
to deal with emergency situations. Public Health has, through the Health Protection and
Promotion Act, power to require or cause work to be done to alleviate situations where there
is a health hazard.
Under current legislation, while it is feasible to pass a Vital Services By-law with similar
provisions, the priority for recovery of the outlay would not be with the same priority as
municipal taxes. Consequently, there could be no guarantee that the funds would be
recovered. In extreme circumstances, this could amount to over $500,000.00 per year. For
1995, 1996 and 1997 the funds expended within the former City of Toronto were
$891,481.08, $246,761.07 and $323,823.38. The City Solicitor has reported earlier on what
would be required to establish a priority equivalent to taxes.
A review of the peak year of 1995 indicates that funds were expended relating to 376
situations. A number of these were multiple situations at the same property; i.e., in some
cases, utility bills were paid several times. About 70% of the situations related to Hydro,
22% to Consumers Gas, and the balance to non-utility items. One payment related to a
specific problem property, and was $191,000.00. In subsequent years, one factor in the
reduction of funds expended related to agreements regarding administration of the
programme in that claims from Utilities would not be made in relation to relatively small
amounts.
In addition to these amounts, there are administrative costs to the City. These were estimated
at $120,000.00 per year. In the 1998 budget process, there was a budget reduction of
$60,000.00 (half year impact) to reflect the approved cancellation of the Urgent Hazards
Programme.
By provision of early notice of potential problem situations, and through administrative
changes by Consumers Gas and Toronto Hydro, the number of urgent, or hazardous
situations could be minimized. While discussions with Consumers Gas indicate that they
would have some concerns about administrative changes which would provide somewhat
earlier notice of problem situations to the City, this could be required under a Vital Services
By-law. Consumers Gas has indicated some willingness to take over a portion of any
administrative process carried out by the City.
This principal concern in this matter is provision of heat in the winter. In that regard, the
Director of Municipal Standards has reviewed the policies of Consumers Gas. That company
advises that they do visit each problem property to determine if cutting of the gas supply
would put any vulnerable persons at risk.
Initial discussions have also taken place with Toronto Hydro and they did indicate
willingness to work together to develop processes to ensure protection of vulnerable
persons. They have also advised that processes have been developed in the balance of former
municipalities which have worked effectively.
Conclusions:
Staff are of the opinion that a Vital Services By-law should not be enacted. Other
mechanisms are available to address the risk to vulnerable persons without incurring the
administrative costs and uncertainty of recovery of funds advanced. With respect to Toronto
Hydro, legislation exists to allow them essentially the same power of recovery of
outstanding bills as under the Urgent Hazards Programme. It would be appropriate if they
were requested to adopt a programme to recover debts in a manner which does not either put
vulnerable persons at risk, or require the City to act as guarantor/ bill collector.
The policy of Consumers Gas referenced above does note that "gas service may be
discontinued only as a last resort", and the company advises that they would generally not
cut service in the winter where vulnerable persons would be at risk.
Prior to considering enacting a Vital Services By-law, should such be deemed necessary, it
would be appropriate for a working group comprised of representatives from Municipal
Standards, Public Health, and the relevant Utilities or fuel providers to establish policies in
respect to discontinuing service/supply, and to monitor these policies in action for at least
one year. It is possible to minimize the number of situations under which Emergency Orders
either under a Property Standards By-law, or the Health Protection and Promotion Act,
would have to be used by ensuring that the Utility companies provide sufficient notice of
planned cutoff to allow for proper evaluation of specific situations and provide the
opportunity to apply alternative solutions.
Establishing a Vital Services By-law under current legislation could put the City in the
position of having significant and potentially non-recoverable funds owing. The former City
of Toronto had between 1995 and 1997 paid between $300,000.00 and $900,000.00 per year
to cover utility bills. Should the programme be extended to cover the new city, this amount
would increase. These funds were not included in departmental budgets, but were requested
from general revenue to cover emergency situations. In addition, funds of up to $120,000.00
would have to be reinstated in an annual budget to cover administrative costs for the
programme.
Contact Name:
Harold Bratten, Director
Municipal Standards
Metro Hall, 22nd Floor
392-8768
VIRGINIA M. WEST
Commissioner
Urban Planning and Development Services
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