June 10, 1998

  To:Urban Environment and Development Committee

From:Commissioner, Urban Planning and Development Services

Subject:Vital Services in Rental Residential Properties (City Wide)

Purpose:

 Report submitted for information, to address issues of enforcement regarding vital services where a landlord who is responsible for the payment of utility bills in a rental residential property defaults on that obligation.

Funding Sources, Financial Implications and Impact Statement:

In the event that Council chooses not to adopt the recommendation below, and instead chooses to enact a Vital Services By-law then that action would require the reversal of Council's previous budgetary decision in order now to commit funds to the staffing and administration of a vital services program in the amount of $60,000 for 1998 and $120,000 annualized thereafter.

In addition, historically the former City of Toronto has committed funds ranging from $500,000 to $1,000,000 annualized to the restoration of utilities in rental residential properties. These funds were recoverable as being collectible through the municipal realty tax process, as the City of Toronto Act provided for. Any future funds to be expended by the City to restore such utilities under a Vital Services By-law would be at great risk of being un-recoverable, given that the enabling legislation doesn't provide for such funds to be placed on the tax rolls. The current legislation provides for a lien to be placed against the property and/or the City to have tenants pay rents directly to the City.

Recommendation:

It is recommended that:

the City of Toronto NOT enact a vital services by-law under authority of the Tenant Protection Act, given the expected high cost of its administration and potential for financial risk to the City.

Background/History:

 Existing municipal standards regulations throughout the new City provide for a range of options in addressing the issue of a landlord's obligation to maintain vital services in rental residential properties.

 Current regulations which exist under authority of the Planning Act set out an owner's responsibility to ensure that vital services such as utilities are maintained for residential tenants. A breach of that obligation is an enforceable offence. All City of Toronto districts, with the exception of the former City of Toronto, have municipal standards regulations enforced under the authority of the Planning Act.

Current regulations within the former City of Toronto, under authority of the City of Toronto Act, set out owner obligations similar to the above but also provide authority for the City to restore utility services where an "urgent hazard" is considered to exist and to re-coup such monies by placing expended amounts directly on the tax roll to be collected in a like manner as municipal taxes. This program has been administratively costly to run and has been targeted to be discontinued as part of the budget process.

At the present time a staff group is working toward drafting harmonized municipal maintenance standards that will be applicable to the entire new City. The enabling legislation for such new regulations will come under the authority of the Building Code Act. On November 28^th, 1997, Royal Assent was given to the Tenant Protection Act which serves to consolidate, replace and supercede numerous existing acts which deal with tenant issues, including the enactment of municipal maintenance standards and by-laws regarding vital services. The Tenant Protection Act is proclaimed as effective and in force June 17^th, 1998.

 Comments:

The Tenant Protection Act amends the Building Code Act which becomes the new enabling legislation for municipal maintenance standards. The Tenant Protection Act also incorporates the former provisions of The Municipal Amendment Act (Vital Services) that allows a municipality to choose to enact a by-law to authorize the restoration of utilities where a landlord defaults on payment of utility bills to rental residential properties. This authority requires that a lien be placed on the title of the property, and allows the municipality to have tenants direct rents to the City until the debt is repaid. This process effectively would appear to make the municipality a quasi-landlord in ensuring that outstanding rents are paid. In addition, there is no reasonable guarantee that monies expended by the Municipality to restore utilities would, in fact ever be re-couped. This process would likely serve to be very labour intensive and costly to run, which may be the reason that to date only three Ontario municipalities have previously chosen to enact a municipal vital services by-law.

 Information obtained from the City of Ottawa who currently administer a vital services by-law indicate that such a program is very time-consuming, administrative and costly in terms of staff time and resources. It is uncertain whether, once the amalgamation of Ottawa-area municipalities occurs, a vital services program will be maintained given that the municipalities around the existing City of Ottawa do not administer such a program. As is the case in most Ontario cities, the municipalities surrounding Ottawa have not chosen to pursue a local vital services by-law.

The Tenant Protection Act sets up a Provincial Tribunal process to address tenant concerns where a municipality has no maintenance standards by-law, and also to enforce vital services provisions that are directly contained in the Act requiring a landlord to ensure that vital services such as utilities are provided. Ministry staff have confirmed that, while a fee is chargeable under the Tenant Protection Act to municipalities where the Provincial tribunal enforces maintenance standards, no fee is chargeable to a municipality where the provincial tribunal enforces vital services. The Act includes Provincial responsibility to directly receive tenant complaints regarding vital services matters and enforce resulting Provincial orders through the courts. This new Act places the onus of evidence collection and complaint reporting directly into the hands of affected tenants, who would then bring their vital services issues forward to the Provincial tribunal for prosecution/enforcement.

Conclusions:

 Given that the current City of Toronto budget process is seeking to discontinue the former City of Toronto's "urgent hazard" program due to the cost of administering it, City Council may similarly want to consider not undertaking an even more bureaucratic and financially risky process in the restoration of utility services under a vital services by-law. It is suggested that City Council seek to rely instead on general enforcement of municipal standards regulations through prosecution by the City as necessary, as well as procedures which are currently being put into place under the Tenant Protection Act for tenants to seek prosecution activity through the Provincial Tribunal specifically regarding vital services.

Contact Name:

Judi McBurney, Technical Advisor, Buildings Division

Toronto City Hall

Phone: 392-7963

Fax: 392-0677

VIRGINIA M. WEST Harold Bratten

CommissionerDirector

Urban Planning and Development ServicesMunicipal Standards Division