August 10, 1998

URBAN ENVIRONMENT AND DEVELOPMENT COMMITTEE:

I am enclosing for your information and any attention deemed necessary, Clause No.3 contained in Report No. 9 of The Urban Environment and Development Committee, headed "Vital Services in Rental Residential Properties in the City of Toronto", which was adopted, without amendment, by the Council of the City of Toronto at its meeting held on July29, 30and31,1998.

for City Clerk

J.A. Abrams/csb

Encl.

Clause sent to:Urban Environment and Development Committee

City Solicitor

c:Council Strategy Committee for People Without Homes

Commissioner of Urban Planning and Development Services

Executive Director and Chief Building Official

Director, Municipal Standards Division, City Planning

Medical Officer of Health

CITY CLERK

Clause embodied in Report No. 9 of the Urban Environment and Development Committee, as adopted by the Council of the City of Toronto at its meeting held on July 29, 30 and 31, 1998.

3

Vital Services in Rental Residential Properties

in the City of Toronto.

(City Council on July 29, 30and 31, 1998, adopted this Clause, without amendment.)

The Urban Environment and Development Committee reports having requested the CitySolicitor to submit a report directly to Council for its meeting scheduled to be held on July 29, 1998, on the legislative amendments that would be required should Council decide to request the Province of Ontario to enact legislation which would permit the new City of Toronto to adopt a Vital Services Program similar to that conducted by the former City of Toronto under its special legislation.

The Urban Environment and Development Committee reports, for the information of Council, having:

(1)deferred consideration of the following reports and communication to its next meeting, scheduled to be held on September8, 1998, for the hearing of deputations;

(2)requested the Commissioner of Urban Planning and Development Services, in consultation with the Executive Director and Chief Building Official, to submit a report to the September8, 1998 meeting of the Urban Environment and Development Committee regarding:

(a)the anticipated actual financial loss resulting from the provision of vital services when necessary under the current legislation; and

(b)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 "UrgentHazard Program" by the former City of Toronto (under the former City of Toronto Act);

(3)requested the Medical Officer of Health to consult with agencies which serve tenants and persons living in poverty, and submit a report to the September 8, 1998 meeting of the Urban Environment and Development Committee on the probable health impacts of refusing to intervene in the cut-off of vital services;

(4)directed that a copy of the following reports and communication be referred to the CouncilStrategy Committee for People Without Homes, with a request that the Committee submit its comments thereon to the September 8, 1998 meeting of the Urban Environment and Development Committee.

The Urban Environment and Development Committee submits the following report (June10, 1998) from the Commissioner of Urban Planning and Development Services:

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 $60,000.00 for 1998 and $120,000.00 annualized thereafter.

In addition, historically the former City of Toronto has committed funds ranging from $500,000.00 to $1,000,000.00 annualized to the restoration of utilities in rental residential properties. These funds were recoverable as being collectible through the municipal realty tax process, as provided for by the City of Toronto Act. 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 unrecoverable, given that the enabling legislation does not 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 the 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 PlanningAct.

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, 1997, Royal Assent was given to the Tenant Protection Act which serves to consolidate, replace and supersede 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, 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 recouped. 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, which currently administers a vital services by-law, indicates 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 TenantProtection Act for tenants to seek prosecution activity through the Provincial Tribunal specifically regarding vital services.

Contact Name:

Ms. Judi McBurney, Technical Advisor, Buildings Division, Toronto City Hall, 392-7963, Fax:392-0677.

The Urban Environment and Development Committee also submits the following report (June9, 1998) from the City Solicitor:

Purpose:

The purpose of this report is to review the potential implications of the motion set out below, to provide information with respect to the authority of City Council to enact a vital services by-law, and to explain the limitations on that authority.

Funding Sources, Financial Implications and Impact Statement:

There will be costs associated with the implementation of programs pursuant to a "vital services by-law", should Council choose to enact such a by-law. In the former City of Toronto, a similar program was in place pursuant to the former City's special legislation. The Budget Committee has recommended discontinuing that program.

Recommendation:

It is recommended that this report be received for information.

Council Reference/Background/History:

At its meeting of May 13 and 14, 1998, City Council referred the following motion to the Urban Environment and Development Committee for its consideration:

WHEREAS the Budget Committee accepted the proposal of the Commissioner of Urban Planning and Development Services to discontinue the program previously delivered only in the former City of Toronto, which paid on behalf of property owners and collected utility payments in like manner as realty property taxes when such utilities had been discontinued to tenanted properties, under the authority of Section6 of the City of Toronto Act, 1936 (which applied only in the former City of Toronto); and

WHEREAS it is anticipated that the legislative authority for this program will be repealed or superseded by the Provincial Government in the spring of 1998; and

WHEREAS it is desirable to ensure regulations are in place that are applicable to the whole of the new City of Toronto; and

WHEREAS Bill 104, The Vital Services Act, authorizes Municipalities to pass By-laws requiring Vital Services Utilities to adopt a similar program;

NOW THEREFORE BE IT RESOLVED THAT the City Solicitor be requested to draft a By-law in accordance with Bill 104 to be presented to the Urban Environment and Development Committee for consideration;

AND BE IT FURTHER RESOLVED THAT City Council communicate with the City's vital services utility providers requesting their co-operation in continuing this service under the authority of and as would be required by the By-law proposed in resolution No.(1);

AND BE IT FURTHER RESOLVED THAT the appropriate staff initiate discussions with the City's vital services utility providers to share information regarding the operational aspects of the former City of Toronto's utility restoration program.

Comments and/or Discussion and/or Justification:

The motion set out above, proposes that the City enact a by-law requiring providers of vital services to adopt a program whereby the service providers would continue to provide services to tenanted properties despite the landlord's failure to make utility payments. City Council, however, lacks the authority to enact such a by-law. Council may require utility companies to give 30 days notice of the intention to discontinue service for non-payment; however, after the 30-day period has elapsed, Council cannot require continuation of the service without payment to the utility company.

The motion refers to "Bill 104, The Vital Services Act", which appears to be a reference to the City's power, under s. 210.2 of the Municipal Act, to enact a vital services by-law. There is not actually a statute entitled "The Vital Services Act". Section 210.2 of the Municipal Act was added to the Municipal Act in 1994 when the Legislature passed the Municipal Amendment Act (Vital Services), 1994, which was Bill 104 when it was introduced. Section 210.2 will be replaced on June 17, 1998, when the Tenant Protection Act (the "TPA"), comes into force. Sections 145 to 153 of the Tenant Protection Act provide authority that is essentially the same as that currently provided in s. 210.2 of the Municipal Act. City Council's authority to enact a vital services by-law will not be changed by the TPA.

The TPA defines "vital service" as "fuel, hydro, gas or hot or cold water", and provides that a "vital services by-law" is a by-law passed pursuant to s.146 of the TPA. Section 146 of the TPA provides that a vital services by-law may require landlords to provide adequate and suitable vital services to the rental units. A vital services by-law may require the supplier of a vital service to notify the municipality if the vital service is to be discontinued for the reason that the landlord has breached a contract with the supplier (i.e., failure to make utility payments). At least 30 days notice is required.

The municipality may then arrange for the service to be provided. The municipality would do this by paying for the service and then attempting to recover the amount paid plus administrative costs. Accordingly, the municipality is authorized to register a lien against the property for the amount, and to direct the tenant to pay any or all of the rent for the unit to the municipality. The payment by the tenant is not to be treated as a default of the obligation to pay rent to the landlord. Naturally, such provisions do not apply where the tenant has agreed to maintain the vital services.

There will be administrative costs to the City of administering a program pursuant to a vital services by-law, and there may also be some difficulty in recovering all of the money paid by the City to the utility companies. It is my understanding that funds have not been budgeted for the administration of a vital services program by the City.

Pursuant to special legislation, the former City of Toronto had a program somewhat similar to that which would be permitted pursuant to a vital services by-law. The Budget Committee has recommended discontinuation of the program. The other former municipalities within the urban area that is currently the City of Toronto had the ability to enact such a by-law, but none of them enacted one.

Should Council choose not to enact a vital services by-law, tenants will still have some recourse against landlords who fail to provide an adequate supply of a vital service. The TPA will prohibit landlords from withholding a "reasonable supply of any vital service ... that it is the landlord's obligation to supply under the tenancy agreement". Tenants may apply to the Ontario Rental Housing Tribunal should the landlord breach this provision. The Tribunal can provide a range of relief including an abatement of rent. In addition, I am informed by staff of the Municipal Standards Division that existing municipal standards by-laws address the provision of vital services.

Conclusions:

While City Council can enact a vital services by-law, it cannot require suppliers of a vital service to provide the service beyond the 30-day notice period or to adopt a program similar to that which was in place in the former City of Toronto.

Contact Name:

Ms. Wendy Walberg , 392-8078.

The Urban Environment and Development Committee also submits the following report (July13, 1998) from Councillor Anne Johnston, North Toronto:

Recommendations:

(1)That your Committee defer this item until your September 8, 1998 meeting for deputations. My reading of the reports before you today will leave tenants at great risk should we eliminate the Urgent Hazards Program. It therefore seems only fair to give tenants across the new City of Toronto time to review the Urgent Hazard Program and the replacement proposed by Councillor Jakobek's motion before you today;

(2)that your Committee ask the City Solicitor to report to the next meeting of your Committee on what legislation would be required to reinstate the former City of Toronto's Urgent Hazard Program to serve the new City of Toronto; and

(3)that the relevant officials report on the ability of Toronto Hydro and other essential services to provide the continuation of services under the same conditions as formerly applied to the Urgent Hazard Program by the old City of Toronto (under the former City of Toronto Act).

Background:

On July 2, 1998, I received the attached communication from the Urban Planning and Development Services Department informing me that the Urgent Hazard Program, formerly operating in the old City of Toronto, has been discontinued due to "budgetary changes".

On checking the Urban Planning and Development budget line (attached) applicable to the cancellation of the Urgent Hazard Program, I was surprised to see the notation that the then-proposed "Vital Services Act" would allow the utilities to continue with the former Urgent Hazard Program. This statement was misleading, to say the least, as far as tenants and their essential services are concerned.

(Communication dated June 26, 1998, from the

Urban Planning and Development Services Department,

referred to in the foregoing report.)

Urgent Hazard Program Change - Former City of Toronto:

Attached is a communique being circulated in order to provide advice of an upcoming program change which is effective July 1, 1998, regarding utility service cuts to rental residential properties within the former City of Toronto. Budgetary changes have resulted in the subject program adjustment.

Please review the attachment and advise relevant parties affiliated with your office or organization.

Thank you.

(Communique dated June 26, 1998, from the

Urban Planning and Development Services Department,

referred to in the foregoing communication.)

Changes in the City of Toronto's Urban Planning and Development Services' budget, as approved by City Council, will result in adjustments to certain of the Department's programs, effective July1, 1998.

The Urgent Hazard Program, which provided only for the former City of Toronto to directly authorize payments to utility companies in cases where hydro or gas services were cut to residential rental properties due to a landlord's defaulting on payments, will be discontinued. The City will continue to handle complaints, and any necessary enforcement action will be undertaken.

The Urban Environment and Development Committee also submits the following communication (May 25, 1998) from the City Clerk:

City Council, at its meeting held on May 13 and 14, 1998, referred the following Motion to the Urban Environment and Development Committee for consideration:

Moved by:Councillor Jakobek

Seconded by:Councillor Ootes

"WHEREAS the Budget Committee accepted the proposal of the Commissioner of Urban Planning and Development Services to discontinue the program previously delivered, only in the former City of Toronto, which paid on behalf of property owners and collected utility payments in like manner as realty property taxes when such utilities had been discontinued to tenanted properties, under the authority of Section 6 of the City of Toronto Act, 1936 (which applied only in the former City of Toronto); and

WHEREAS it is anticipated that the legislative authority for this program will be repealed or superseded by the Provincial Government in the spring of 1998; and

WHEREAS it is desirable to ensure regulations are in place that are applicable to the whole of the new City of Toronto; and

WHEREAS Bill 104, The Vital Services Act, authorizes Municipalities to pass By-laws requiring Vital Services Utilities to adopt a similar program;

NOW THEREFORE BE IT RESOLVED THAT the City Solicitor be requested to draft a By-law in accordance with Bill 104 to be presented to the Urban Environment and Development Committee for consideration;

AND BE IT FURTHER RESOLVED THAT City Council communicate with the City's vital services utility providers requesting their co-operation in continuing this service under the authority of and as would be required by the By-law proposed in resolution No. (1);

AND BE IT FURTHER RESOLVED THAT the appropriate staff initiate discussions with the City's vital services utility providers to share information regarding the operational aspects of the former City of Toronto's utility restoration program."

(A copy of the relevant pages of the Urban Planning and Development budget, referred to in the foregoing report dated July 13, 1998, from Councillor Anne Johnston, North Toronto, is on file in the office of the City Clerk.)

(City Council on July 29, 30 and 31, 1998, had before it, during consideration of the foregoing Clause, the following report (July 15, 1998) from the City Solicitor:

Purpose:

The Urban Environment and Development Committee has requested that I report directly to Council on the legislative amendments that would be required to permit the City to adopt a vital services program similar to that conducted in the former City of Toronto under its special legislation.

Funding Sources, Financial Implications and Impact Statement:

Should the City request special legislation, there will likely be a cost of more than $6,000.00 to make the request. Should the City's request be granted, there will be a cost of operating a vital services program. The Committee deferred consideration of the Commissioner of Urban Planning and Development's report of June 10, 1998 which outlined some of those costs. The Commissioner has been requested to prepare an additional report for the Committee's September 8, 1998, meeting.

Recommendation:

It is recommended that this report be received for information.

Council Reference/Background/History:

On July 13, 1998, the Urban Environment and Development Committee considered two reports on the subject of vital services by-laws.

A report from me explained that the City lacked the authority to require providers of vital services to adopt a program whereby the suppliers would continue to provide services to rental properties despite the landlord's failure to make utility payments.

The report also explained that the Tenant Protection Act gives Council the power to enact a vital services by-law. Under a vital services by-law the City can pay the cost of providing a vital service when the landlord has failed to do so and the service provider intends to discontinue the service. The City would have some power to collect the money spent. It could place a lien on the premises and require the tenant to pay any or all rent directly to the City.

The former City of Toronto had a similar program under its special legislation. The special legislation applies only to the urban area that was formerly the City of Toronto. The main difference between the former City's program and one which the new City could adopt is that special legislation permitted the former City to collect the money paid out as realty taxes. Realty taxes have the first priority above all other claims. For this reason, the money was much easier to collect under that program. Even so, the program was considered costly to administer and has been discontinued.

The Commissioner's report recommends 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."

The Urban Environment and Development Committee requested that I report directly to Council on the legislative amendments that would be required to permit the City to adopt a program similar to the one that was in place in the former City.

Comments and/or Discussion and/or Justification:

The program that was in place in the former City of Toronto was authorized by the City of Toronto Act, 1936. That special legislation provides authority for property standards by-laws and enforcement of the by-laws. Under the legislation the former City could enact a by-law like a vital services by-law and adopt a program similar to that which can currently be established by the City under the Tenant Protection Act. Like the Tenant Protection Act, the special legislation provided that the City had a lien for the amount expended; however, the special legislation also provided that the amount was deemed to be municipal real property taxes and could be collected in the same manner as real property taxes.

The Tenant Protection Act does not authorize the municipality to collect the amount owed to it as real property taxes. I have been asked to report on the legislative amendments that would be required to give the City this authority. There are three possible approaches.

First, the City could request that the City of Toronto Act, 1936 be amended to provide that the relevant provisions apply the new City of Toronto. I do not recommend this course of action. Only a small part of a very lengthy section of that legislation is relevant, and there is a standing order that special legislation will not be amended unless the entire section is put forward for amendment.

Second, the City could request new special legislation which would include provisions similar to the relevant portions of the City of Toronto Act, 1936 and any portions of the relevant Tenant Protection Act provisions that might assist.

In order to expedite the processing of an application for special legislation and as encouraged by guidelines of the Standing Committee on Regulations and Private Bills, the usual practice is to consult ahead of time with the Legislative Counsel on the form of the Private Bill and with the Ministry of Municipal Affairs' staff on both the form and content of the Private Bill before giving notice and filing an application for a Private Bill with the Clerk of the House.

Third, the City could request an amendment to the Tenant Protection Act. The amendment could add to the current provision that permits a municipality to put a lien on the property. It could provide that the amount of the lien is deemed to be real property taxes.

I am informed by staff of the Municipal Standards Division that they have met with Consumers Gas and Toronto Hydro about the discontinuation of the vital services program in the former City of Toronto. They have been informed that the utilities will institute their normal collection process which includes a policy of not cutting in winter if vulnerable people are at risk.

Conclusions:

Should City Council wish to request legislation that would enable the City to adopt a program similar to the vital services program that was in place in the former City of Toronto, Council could instruct staff to make that request. Should City Council wish to request private legislation, Council could instruct the City Solicitor to consult with the Legislative Counsel and the Minister of Municipal Affairs and report back to the Urban Environment and Development Committee.

Contact Name:

Wendy E. Walberg, Solicitor, 392-8078.)