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File No./798008

Urban Planning and Development Services

January 21, 1999

To:Urban Environment & Development Committee

From:Commissioner of Urban Planning and Development Services

Subject:Further Report on New Official Plan Policies and Related By-Laws Regarding the Conversion to Condominium and Demolition of Rental Housing,

Purpose:

To respond to the motions made at the Urban Environment and Development Committee meeting of November 30, 1998 concerning the original and subsequent planning reports on new condominium conversion and demolition control policies (October 15, 1998, and November 23, 1998).

Funding Sources, Financial Implications and Impact Statement:

There are no additional funding or financial implications associated with this follow-up report.

Recommendations:

(1)Council adopt new official plan policies to regulate the conversion to condominium and demolition of rental housing by adding either the new policies presented as Option A, or Option B, to the Metropolitan Toronto Official Plan:

Option A:

Section 3.2.3 Conversion and Demolition of Rental Housing

It is the policy of Council:

135.1to preserve, maintain and replenish the supply of residential buildings, and particularly rental buildings, across the City of Toronto by restricting the demolition of residential property and the conversion of rental units to condominium, by discouraging the conversion of rental units to equity co-operative, and by encouraging new rental housing production.

135.2to restrict the conversion to condominium of any building, or any related group of buildings, including equity co-operatives, containing six or more rented residential units as it would be premature and not in the public interest, unless the vacancy rate in the City of Toronto, as reported by Canada Mortgage and Housing Corporation, for private rental apartments and townhouses, respectively, has been at or above 2.5 percent for the preceding two year reporting period.

135.3despite policies 135.1, 135.2, and 135.4, to consider allowing the conversion of buildings containing six or more rented residential units only where:

(a)the rents that were actually charged for each unit in the building or related group of buildings one year prior to the application, were at or above the average high-end rent level by unit type as prescribed by Council from time to time, and based on Canada Mortgage and Housing Corporation reports; and

(b)at least 66 percent of the tenanted households have expressed their support in writing for the conversion application in a manner prescribed by Council.

135.4to seek the retention of rented residential units, except where the whole or part of a building which contains such units is in the opinion of the Chief Building Official structurally unsound, and to consider, where appropriate, acquiring or leasing a property where such units are at risk of being demolished.

135.5(a)when considering redevelopment applications involving the demolition of rented residential units, to seek the replacement of the demolished rental units with rental units of a similar number, type, size, and level of affordability in the new development, and/or alternative arrangements, which in the opinion of Council are consistent with the intent of this policy; and

(b)when considering such applications in the context of an increase in height and/or density, to secure such replacement units and/or alternative arrangements through an appropriate legal agreement under Section 37 of the Planning Act.

Option B

Should Council chose to provide an exemption for equity co-operatives under specific circumstances, it is recommended that policies 135.1, 135.2, 135.4 and 135.5 of Option A be adopted, and policy 135.3 be replaced with the following:

135.3(a)despite policies 135.1, 135.2, and 135.4, to consider allowing the conversion of buildings containing six or more rented residential units only where:

(i)the rents that were actually charged for each unit in the building or related group of buildings one year prior to the application, were at or above the average high-end rent level by unit type as prescribed by Council from time to time, and based on Canada Mortgage and Housing Corporation reports; and

(ii)at least 66 percent of the tenanted households have expressed their support in writing for the conversion application in a manner prescribed by Council; and

(b)despite policies 135.1, 135.2 and 135.4, to consider allowing the conversion of equity co-operative buildings containing six or more rented residential units: which were legally created prior to June 17, 1998; where 50 percent or less of the units are tenanted; and where 66 percent of each of the tenant and shareholder-occupied households have expressed their support in writing for the conversion application in a manner prescribed by Council.

(2)Council adopt the following changes to support and bring effect to the proposed policies set out in (1) above:

(a)add the following definitions under the Glossary of Terms, Section 1.4.4 of the Metropolitan Toronto Official Plan:

"related group of buildings"

buildings that are under the same ownership and on the same parcel of land as defined in the Planning Act.

"rented residential units"

means premises used for rented residential purposes, and includes premises that have been used for rented residential purposes and are vacant.

(b)delete the following sections dealing with conversions:

sections 2.5.6, 4.5.3, 4.5.4 and 4.5.5 in the East York Official Plan;

sections 2.2.13 and 11.15.2 and the words "or conversion of existing rental accommodation" in sections 11.15.3 and 11.15.4 in the Etobicoke Official Plan;

sections 2.6.2 and 2.6.3 in Part C.4 of the North York Official Plan;

section 6.18 in the Toronto Official Plan; and

section 9.7(b) and item 6. in Part (B) in Appendix I of the York Official Plan;

(c) deleting the following sections dealing with demolitions:

section 2.6.3 in Part C.4 of the North York Official Plan;

section 2.2.15 in the Etobicoke Official Plan;

section 9.8 in the York Official Plan;

section 6.19 in the City of Toronto Official Plan; and

sections 4.10 and 4.10.1 in the East York Official Plan;

(d)deleting the following sections dealing with the replacement of housing:

section 2.6.4 in Part C.4 of the North York Official Plan; and

section 2.2.16 in the Etobicoke Official Plan; and

(e)making any related technical amendments to the Official Plans listed in Recommendations Nos. (2)(a), (b), (c), (d) and (e) to reflect the amendment and deletion of the sections.

(3)Upon adoption of the Official Plan policies outlined in Recommendation Nos. (1) and (2), Council delegate the responsibility for hearing deputations on condominium conversion applications to meetings of the respective Community Councils and authorize the amendment of the Procedural By-law as necessary, and repeal the interim policies and procedures that Council adopted in Clause no. 4 of Report no. 7 of the UEDC on June3, 4 and 5, 1998;

(4)Council adopt the application, notice and meeting requirements for condominium conversion and demolition applications detailed in Appendix A;

(5)Council adopt as policy that for any official plan amendment application and/or zoning by-law application that, if approved would result in the demolition of rented residential units, at minimum notice shall be given in accordance with:

a) Subsections 2.(2) 1. and 2.(2) 2. of Ontario Regulation 198/96 as amended by Ontario Regulation 506/98 (notice of public meeting for official plan amendment by mail to owners within 120 metres and posting a notice on the subject property visible from a public road); and/or

b)Subsections 3.(2)1. and 3(2)2. of Ontario Regulation 199/96 as amended by Ontario Regulation 507/98 (notice of public meeting for zoning by-law by mail to owners within 120 metres and posting a notice on the subject property visible from a public road); and the applicant shall be requested to post a notice of the application in a manner prescribed by the City in a central area of the property.

(6)Council resolve that for the purposes of defining "high-end rental units" in accordance with Policy No. 135.3 (refer to Recommendation No. (1)) the factor of 1.5 times the City's average rent (by bedroom size) as detailed in Appendix B shall be used.

(7) Urban Planning and Development Services staff be requested to review the demolition control by-laws of the former municipalities with respect to, among other matters, the scope and coverage of the various by-laws, as well as the delegation procedures, conditions, penalties and enforcement issues, and report back to the Committee on harmonizing the by-laws;

(8)As an interim measure, Council enact a by-law in the form of the attached draft Bill (AppendixC) which designates the former City of Scarborough as a demolition control area pursuant to section 33 of the Planning Act, requires Council to approve the issuance of demolition permits for residential properties containing six or more units, and delegates to the Chief Building Official the authority to issue demolition permits for residential properties containing five or fewer dwelling units;

(9)Authority be granted to apply to the Province for special legislation on demolition control substantially in the form of the draft Private Bill contained in Schedule A of Appendix D which would extend the former City of Toronto's special legislation to all of the new City;

(10)The appropriate City officials be authorized to undertake any necessary action to give effect thereto, including preparing and introducing any necessary bills and giving notice of the public meeting.

Background:

On November 30, 1998 the Urban Environment and Development Committee (UEDC) held a statutory public meeting under the Planning Act to consider comments on two planning reports on the proposed official plan polices on condominium conversion and demolition control (dated October 15, 1998 and November 23, 1998). After hearing deputations, the Committee recommended to Council the adoption of several policies, and also requested staff to report back to the UEDC's meeting on February 8, 1999 on a number of related matters.

At its meeting of December 16 and 17, 1998, Council referred the Clause, including the proposed policies, back to the UEDC to be considered along with the further reports from staff.

This report addresses both the amendments to the proposed policies which were forwarded to Council, and the requests made by UEDC for reports on specific matters. Based on the motions made by the UEDC, a number of changes are suggested to the proposed policies.

The timing of this report coincides with the recent release of the Mayor's Homelessness Action Task Force report: Taking Responsibility for Homelessness - An Action Plan for Toronto, on January 14, 1999. The Task Force document strongly emphasized the importance of preserving rental housing in the City, and in particular, the need for municipal (and provincial) action to restrict losses due to the conversion and demolition of rental properties. To help stem the rise in homelessness, preservation of the City's rental housing stock (475,000 units) is critical, especially in light of the currently low vacancy rates, and lack of new affordable housing construction. The specific recommendations of the Task Force on condominium conversion and demolition control are consistent with the proposed policies set out in this report.

UEDC's Recommended Policies to Council

The UEDC, after considering the deputations and the planning report dated November 23, 1998, at its meeting on November 30, 1998 recommended that the report be adopted subject to several specific wording changes to a number of the proposed policies. These changes were intended to strengthen the policies in two areas: the conversion of rental units to equity co-operatives; and the possible acquisition or leasing of rental properties subject to demolition.

With respect to the first area, the UEDC recommended that the proposed policy 135.1 be amended by deleting the word "discouraging" and inserting in its place, the word "prohibiting" so that the section would read as follows:

"135.1to preserve, maintain and replenish the supply of residential buildings, and particularly rental buildings, across the City of Toronto by restricting the demolition of residential property and the conversion of rental units to condominium, by prohibiting the conversion of rental units to equity co-operative, and by encouraging new rental housing production."

As stated in the earlier planning report of November 23, 1998, I am quite concerned about such a significant change being made to the policy. At present, the City has no authority to regulate the establishment of equity co-operatives. The Province simply registers these corporations under the Co-operative Corporations Act. As no special municipal approvals are required to create equity co-operatives, we cannot prohibit them.

As well, the Province in a letter dated December 24, 1998 to the Executive Director and Chief Planner, City Planning Division has indicated that, while they are supportive of municipal conversion and demolition policies being adopted, they "would not be supportive of measures for which the municipality does not have any legislative authority." It would also be misleading to the public to adopt a policy without the appropriate authority, and would raise expectations that the City could not meet. Furthermore, the approval of a policy by Council which purports taking action beyond our authority (i.e. prohibiting the conversion of rental units to equity co-operative) would be vulnerable, and could possibly put all of the policies at risk, if challenged at the Ontario Municipal Board.

On the other hand, the City can "discourage" the conversion of rental units to equity co-operative, sending a clear message to property owners considering such a conversion, by restricting the subsequent conversion of the equity co-operative (containing rental units) to condominium. The subject of equity co-operatives is discussed in more detailed under section 2 (a) of this report.

UEDC's second amendment to the proposed policies concerned the deletion of the words "where appropriate" which appeared after the words "to consider", so that the policy would read as follows:

"135.4to seek the retention of rented residential units, except where the whole or part of a building which contains such units is in the opinion of the Chief Building Official structurally unsound, and to consider, acquiring or leasing a property where such units are at risk of being demolished."

The use of the term "where appropriate" was intended to offer Council greater flexibility and discretion when considering the acquisition or leasing of a private rental property subject to demolition. Both the East York and North York Community Councils had expressed some concern over the City's ability to purchase such properties, given the many demands now being placed on the municipal budget. Due to financial constraints, I agree that the City could only exercise this option in very unique circumstances. Therefore, I am recommending that the words "where appropriate" should be retained, to ensure that Council has full discretion in applying this part of the policy.

2.UEDC's Requests for Further Staff Reports

The Urban Environment and Development Committee, at its meeting of November 30, 1998 had also requested that the Commissioner of Urban Planning and Development Services report back to the Committee on the following matters. Each of these matters will be presented and addressed in the following sections.

(a)Address a number of specific issues pertaining to Equity Co-operatives

At the November 30, 1998 public meeting, a number of equity co-operative shareholders and solicitors working on behalf of equity co-operative corporations spoke in opposition to the proposed policy to restrict the conversion of equity co-operatives to condominium. The argument in support of the proposed policy to restrict the conversion of equity co-operatives was put forward by representatives of Parkdale Legal Services and Etobicoke Legal Services.

To help reconcile these differing opinions, the UEDC requested that staff report on:

"addressing the problem of shareholders trapped in co-ownership or equity co-operatives, as it relates to co-ownership and equity co-operative buildings established prior to The Rental Housing Protection Act, without deterioration of the protection intended for existing rental units"

Equity co-operatives and co-ownerships have presented a number of key problems. While I realize there are certain differences between the two tenure forms, they both generally involve individuals having a share in a corporation or a percentage interest in a property, and exclusive occupancy rights to a particular unit. For the sake of simplicity, the term "equity co-operative", as defined in Appendix E, will be used to refer to both tenure forms.

In my November 23, 1998 and October 15, 1998 planning reports, I outlined some of the main issues surrounding equity co-operatives. We estimate that there are approximately 5,000 equity co-operative units in the new City, and that in aggregate about 35 to 45 percent of these units are rented.

The vast majority of equity co-operatives were created in the mid to late 1980's through the conversion of rental buildings. Many of them were established as means of bypassing the municipal policies and provincial legislation (RHPA, 1986) which restricted the conversion of rental properties to condominium. In 1989, the RHPA was tightened up to prohibit any further conversions to equity co-operative from taking place without municipal approval. This legislative change essentially brought an end to the creation of new equity co-operatives.

In most instances, the original proponents of the equity co-operatives have divested their interest in the buildings to the shareholders. Many shareholders have stated that they are now experiencing a number of difficulties including:

i)problems in obtaining bank financing (only four known lenders in the City);

ii) financing that is available is generally provided as a personal loan (rather than a mortgage), typically at a relatively high interest rate;

iii) substantial costs in redrafting their legal documentation to the satisfaction of financial lenders;

iv) a depreciation in the market value of their units (although, other tenure forms such as condominiums have also seen a significant reduction in market value since the late 1980's); and

v) difficulty in selling their units owing to the above problems.

Conversion to condominium has been seen by many equity co-operative shareholders as the answer to resolving their dilemma. My concerns about the conversion of equity co-operatives were presented in the November 23, 1998 report, and are summarized as follows:

i)Security of Tenure. Tenants in equity co-operatives have more security of tenure than tenants in condominiums as in most cases, they cannot be evicted for the owner's use. While the TPA allows existing equity co-operative tenants to stay in their units when a building is converted to condominium, any future tenants in the condominium building can be evicted for the owner's personal use.

ii) Potential Increase in Units Costs/Rents. Condominium buildings typically have a much higher market value than equity co-operatives. Although the exact amount may vary depending on a number of factors, when an equity co-operative building is converted, the market value of each unit increases. Starting with the first sale of the units, it is anticipated that there would generally be upward pressure on the rents of the tenanted equity co-operative units, in order to cover the expected higher unit purchase price and carrying costs.

iii) Two Step Conversion Process. Permitting the conversion of equity co-operatives to condominium would likely encourage a two-step conversion process in future, whereby existing rental buildings will be converted to equity co-operative and later condominium. Proponents of equity co-operative conversions have argued that existing co-operatives could be "grandfathered" to allow only pre-TPA buildings to be converted. While there may be merit in assisting the current pool of equity co-operative shareholders who are experiencing hardship, if this approach were employed, the City would risk facing similar requests in the future to convert to condominium, equity co-operatives which had been created through the conversion of rental units since the TPA came into effect.

In an effort to help resolve the current financing dilemma faced by some equity co-operatives and avoid the need for conversion, City staff have worked in conjunction with solicitors for the equity co-operative shareholders, and with representatives from the lending community. Unfortunately, lenders have been reluctant to offer conventional mortgage financing to the shareholders. One reason is that there is no mortgage insurance available for equity co-operative units. While the CMHC has indicated that the National Housing Act may be changed to extend mortgage insurance to this tenure form, the amendments have not yet materialized.

In an effort to help relieve some of the problems faced by equity co-operatives, the UEDC, at its meeting on November 30, 1998, also asked staff to respond to the option of:

"amending Recommendation No. 2 of the York Community Council report by deleting from paragraph 135.2 the words "or more" and inserting in lieu the words "or less" so that the revised policy shall now read as follows:

135.2to restrict the conversion to condominium of any building, or any related group of buildings, exclusive of equity co-operatives where 33 per cent or less of the units are tenanted, as it would be premature and not in the public interest, unless the vacancy rate in the City of Toronto, as reported by Canada Mortgage and Housing Corporation, for private rental apartments and townhouses, respectively, has been at or above 2.5 percent for the preceding two year reporting period."

While I understand the intent of the above proposed change, the policy as worded would result in some unintended results. Policy 135.2 as stated in the recommendations of this report would "restrict the conversion to condominium of any building, ... including equity co-operatives, containing six or more rented residential units." The amended York Community Council recommendation would effectively replace the last part of the original policy (beginning with the word "including") with "exclusive of equity co-operatives where 33 percent or less of the units are tenanted." This change would delete the minimum unit threshold of six or more rented units for all buildings with rental units (not just equity co-operatives). If Council wanted to consider permitting the conversion of some equity co-operatives, a better approach would be to create a separate policy to deal with this specific tenure form, similar to the policy exemption proposed for the high-end market units.

Another possible concern with the amended York Community Council policy is that it limits the conversion permission to equity co-operatives where 33 percent or less of the units are tenanted. I agree that restricting conversions to those buildings with the fewest number of tenants is an important consideration, and would help to minimize the number of tenants affected. However, I should point out that this qualification would not address the concerns of most of the shareholders in attendance at the November 30, 1998 meeting. Equity co-operatives such as 123 Strathcona Avenue or 30 Gloucester Street, have about 50 percent of their units rented, and consequently would not be eligible for the York Community Council's proposed exemption.

Simply stated, there is no easy or clear means of eliminating the problems associated with the conversion of equity co-operatives to condominium. To avoid the drawbacks associated with conversions, as outlined above, I am recommending that the policy previously put forwarded, as stated in recommendation 1) Option A of this report, be adopted.

However, should Council wish to provide an exemption for equity co-operatives, I have drafted an alternative policy, which may serve to minimize the number of conversions that take place. This new policy could help to address the problems with the existing units, while possibly acting as a disincentive to future "two stage" conversions. It would also help to ensure that existing tenants are fully informed of the proposal and given some choice as to its outcome. Specifically, I am suggesting the following wording could be adopted:

135.3despite policies 135.1, 135.2 and 135.4, to consider allowing the conversion of equity co-operative buildings containing six or more rented residential units: which were legally created prior to June 17, 1998; where 50 percent or less of the units are tenanted; and where 66 percent of each of the tenant and shareholder-occupied households have expressed their support in writing for the conversion application in a manner prescribed by Council.

(b)Extended Protection to all Rental Units in Multiple Residential Zones

It appears that the Committee's intent was to capture all rental units which are usually allowed in multiple unit zoning designations. However, each of the former municipalities has its own zoning by-laws which treat multiple unit residential zones differently. For example, in East York, North York, Toronto and York, all of the lower density residential uses such as single family detached dwellings, townhouses, and plexes are also allowed in zones designated for apartments. However, in most instances in Scarborough only one use is permitted in each of the residential zones (e.g., single detached, street townhouses and multi-family residential are not permitted in an apartment zone). In Etobicoke, a range of uses including single detached and apartment buildings are permitted in the R5 zone, while only apartment buildings are allowed in the R6 designation. Given these current disparities, it would not be possible to apply the conversion and demolition policies consistently across all multiple unit zones. This approach would also fail to capture rental units in commercial/residential mixed-use zoning districts.

The most straightforward means to ensure a consistent City-wide approach would be to apply the policy to buildings with a minimum number of units, regardless of the zoning attached to the property. I have suggested that six units could serve as a minimum number of units in the new policies primarily because it is consistent with several policies and by-laws of the former municipalities (e.g. the former City of Toronto's special legislation on demolition control), and is similar to the five and more units used under the former Rental Housing Protection Act (RHPA). The intention has been to exempt single and semi-detached homes, and some smaller converted houses and plexes (duplexes, triplexes and fourplexes).

The threat to the conversion of smaller buildings may not be considerable. Between 1986 and 1996 (while the RHPA was in effect), only 21 units in smaller buildings in the City (all in former Toronto) were converted. However, applications (conversion and renovation) involving buildings with a smaller number of units were found to be labour intensive to administer.

The main emphasis under both the proposed policies and the RHPA has been to protect the greatest number of units (i.e. apartment buildings) while permitting some flexibility for smaller buildings. In particular, it was considered that owner-occupants should be permitted to alter their premises and create (or delete) accessory units, without subjecting them to excessive regulatory requirements. The need to provide owners with the flexibility to create accessory apartments was also put forward by the Mayor's Task Force in its recent report. In this respect, I consider that applying the policies to six or more units is appropriate.

(c)All Rental Units, Regardless of Market Rent, be given Protection of the Official Plan Provision

The proposed policy 135.3 would permit Council to consider the conversion to condominium of buildings where the rents that were charged for each unit were above a specified level one year prior to the application being made. I have recommended that this level be set at 1.5 times the average rental rate for each unit type across the City as reported by Canada Mortgage and Housing Corporation (CMHC).

At the November 30, 1998 public meeting held by the UEDC, a representative from the Federation of Metro Tenants' Associations (FMTA) had expressed concern that a significant number of tenants in higher-rent buildings may be adversely affected by any conversions permitted under this policy. In response, the UEDC had asked staff to consider applying the conversion policy to all rental units regardless of the market rent charged.

The partial exemption for high-end units was first discussed in the October 15, 1998 planning report. It was felt that the City's primary concern should be the protection of the majority of the housing stock, which would serve relatively lower and moderate income households. Generally, this segment of the population is more vulnerable, and has fewer alternative housing options available to them.

However, protection of the higher-rent stock is also important. The conversion of high-end buildings could result in displacement of some tenants who may compete with lower-income households for the remaining rental units. As well, many tenants in these buildings have chosen to live in rental apartments for specific reasons (e.g. not enough disposable money for a down payment, no interest in long-term mortgaging commitments, conventional rental units offer more security than rented condominium units). In this respect, I agree with the FMTA staff who has suggested that some additional choice and protection should be provided to the tenants of high-end buildings.

One way to offer more choice to tenants while permitting the limited conversion of high-end buildings, would be to require that a certain percentage of tenant households be in favour of such conversions. To implement this, I am recommending the addition of a further qualification to policy 135.3 to allow the conversion of high-end buildings, only where at least 66 percent of the tenanted households are in support of the application. Tenant support should be expressed in writing and submitted at the time the application is made.

With respect to Policy 135.3 I am also recommending that the word "actually" be inserted prior to the word "charged". This merely adopts the same terminology used by the Province, and helps to clarify that staff should consider the rent that was actually charged for the unit when reviewing the request for a partial exemption, rather than the legal maximum rent allowed under the Tenant Protection Act (TPA).

(d)Planning Notification be extended to All Tenant

The November 23, 1998 planning report considered by the UEDC at the November 30, 1998 public meeting recommended (recommendation no. 4 of this report) that Council adopt specific application, notice and meeting requirements for condominium applications, and demolition applications which are subject to the City's special legislation (see Appendix A of this report). The recommended notice requirements are as follows:

The applicant shall be requested to post a notice of the application in a manner prescribed by the City in a central area of the property; and

The City shall, at least fourteen (14) days before the City's meeting to hear deputations on the application, issue notice of the meeting to (i) the tenants of the subject building by prepaid first class mail; and (ii) the general public by placing an advertisement in the local community newspaper.

These requirements have been recommended in an effort to ensure the tenants are notified of conversion and demolition applications, as the Planning Act does not prescribe notification requirements for such applications.

While the proposed notice requirements set out in Appendix A should provide adequate notice to tenants in the case of conversion applications, with respect to demolition applications, they would only apply to proposals subject to the City's special demolition control legislation. The special legislation, which at present is only in effect in the former City of Toronto, allows a demolition permit to be postponed for up to one year. This provides some additional time for Council to consider whether the tenants will be properly relocated, and whether the acquisition of the property is warranted. In this instance, notice and tenant input is appropriate.

However, until the Province approves the extension of the special legislation, notice of a demolition application is not recommended for tenants in all other former municipalities. The proponent would typically not apply for a demolition permit until all other planning approvals and building permits have been obtained. Once a building permit has been issued, under Section 33 of the Planning Act, the municipality must issue a demolition permit. It would then be too late in the process to seek tenant input.

Given the possible lack of advance notice for tenants in buildings to be demolished, the UEDC has requested that staff report on other means to advise all tenants of proposed applications involving demolitions earlier in the process. The Planning Act does set out notice requirements for development applications which would require an amendment to the municipal official plans and zoning by-laws. Typically, these types of approvals are needed for proposals involving the demolition of existing buildings and the redevelopment of a site.

With respect to notice requirements for public meetings regarding official plan amendment and zoning by-law applications, the Planning Act regulations provide two options: (1) personal service or prepaid first class mail to every owner of land within 120 metres of the area and posting a notice on the property at a location visible and legible from a public road other place to which the public has access; or (2) publication in a newspaper. Option (1) offers the benefit of requiring that notice be posted on the subject property, whereas notification by the newspaper (option 2) may not provide sufficient notice to tenants. Therefore, it would be appropriate for Council to adopt a policy that requires, for any official plan amendment application and/or zoning by-law application which involves the demolition of rented residential units, that notice shall be given in accordance with option (1) which is authorized under:

Subsections 2.(2) 1. and 2.(2) 2. of Ontario Regulation 198/96 as amended by Ontario Regulation 506/98 (notice of public meeting for official plan amendment by mail to owners within 120 metres and posting a notice on the subject property); and/or

Subsections 3.(2)1. and 3(2)2. of Ontario Regulation 199/96 as amended by Ontario Regulation 507/98 (notice of public meeting for zoning by-law by mail to owners within 120 metres and posting a notice on the subject property).

At the time the applicant is required to post a notice on the property visible from a public road, staff will also request the owner to place a notice of the application in a central area of the development (lobby for an apartment building and garbage collection area for a townhouse complex). This would fulfill requirements of the Planning Act and not preclude additional notice also being given in the newspaper under option (2) where warranted.

(e)All reports submitted to City Council include Complete Details on Outstanding Work Orders and the Condition of the Building at the Preliminary Application Stage

The UEDC had also asked staff to comment on the possibility of including, in all conversion and demolition reports to Council, information on any outstanding work orders and the condition of the building.

Details on outstanding work orders could possibly be generated and included in a preliminary report to Council. The orders, however, will not confirm that the building is absolutely in accordance with all regulations. It will only indicate whether inspections staff are aware of any contraventions.

As mentioned in my November 23, 1998 report, it would not be advisable for the City to refuse an application on the basis of outstanding work orders, as that action may be appealed to the OMB and would be vulnerable. When informed of the outstanding work orders through the preliminary report on the conversions or demolition applications, Council may advise staff to take further steps to ensure the compliance of the orders. The most appropriate means for dealing with outstanding orders would be through the enforcement of property standards by-laws and the Building Code Act.

Unlike details on outstanding work orders, information on the condition of buildings subject to conversion or demolition is not readily available to the City. Site visits at the preliminary application stage and detailed assessments of these buildings by Building Inspections staff would not be feasible, given their current workload. For this reason, the Application Requirements set out in Appendix A indicate that a proponent making an application for either condominium conversion or demolition (in areas subject to special legislation) "may be required to submit a report from a qualified consultant, agreeable to the City, evaluating the structural soundness and general condition and maintenance of the structures and associated facilities."

The preparation of a condition report by the proponent may be costly, and not warranted in all situations. I am, therefore, suggesting that planning and building staff could comment on the need for a detailed assessment at the time when the preliminary report is submitted to Council. If considered appropriate the assessment could be completed prior to the preparation of the final staff report, and the Community Council meeting to hear deputations.

(f)The North York Community Council's recommendations A. & B., embodied in the report (November 17, 1998) from the City Clerk

The North York Community Council, at its special meeting on November 16, 1998 requested that staff report on the following motions that would provide for site-specific, area and general exemptions to the demolition and conversion policies:

"A.Moved by Councillor Feldman:

That a further clause 135.6 be added as follows:

135.6Council may consider exempting specific sites or areas from the restrictions imposed by policies 135.2, 135.3, 135.4 and 135.5, if the following conditions exist:

(i)the building is functionally obsolete;

(ii)it is no longer economically feasible to retrofit the building for the purposes of preserving the stock;

(iii)the existing building is a blight on the neighbourhood characteristic; and

iv)the in-situ tenants want to buy the building; and

B.Moved by Councillor Flint:

That Council may exempt properties, generally, specifically, or in areas included in official plan amendments or detailed secondary plans, from the provisions of this official plan amendment whenever desirable for the purposes of good planning."

In my November 23, 1998 report which the UEDC considered at the public meeting on November 30, 1998, I reported on North York Community Council's suggestions and indicated that with the exception of a recommended change to policy 135.4 to permit the demolition of those buildings where is it no longer practical to consider the rehabilitation of the structure, Council should not adopt policies that permit the suggested exemptions.

This section of the report is intended to provide further clarification to the UEDC as to my reasons for not supporting the exemptions. In addition to the reasons presented in my November 30 report, there are additional arguments for not adopting the proposed exemptions.

I am concerned that the exemptions may actually serve as an incentive to not maintain rental properties. Allowing a building to deteriorate could lead to it becoming functionally obsolete, no longer economically feasible to retrofit, or a blight on the community. Once the building has reached this point, it could then be exempted from the policies and be demolished or converted to condominium.

These conditions can be prevented through proper maintenance by the owner and enforcement of property and buildings standards by the City. The new TPA allows landlords greater flexibility to repair buildings and cover their costs through increased rents. These higher rents can be maintained even after the costs have been recouped.

There is evidence that landlords, in general, can afford to pay for needed improvements. In 1996, Russell Canadian Property Index, a highly respected gauge of investment activity, indicated that Ontario's apartment sector had delivered a 10-per-cent annual return on investment over the previous 10 years, outpacing all other sectors including retail, industrial, office and mixed-use projects.

A more recent study prepared, by Gerald R. Genge Building Consultants Inc., for the City and CMHC looked at the repair and replacement needs in the high-rise rental sector. Based on the findings of the study, it has been estimated that the average costs of required capital work per unit over a 10 year period would be about $7,500. If all the necessary work is done over the 10 year period, rents for sitting tenants would increase by only 3.8 percent annually (although this is subject to variations in unit costs between buildings and dependent on the initial rents). This is just 0.8 percent a year more than what the rents could increase under the statutory guideline, without any work having to be done. Although the actual cost of the capital work for older buildings is higher, there is greater likelihood that mortgages would have been retired for these buildings (depending on

history of sales), leaving additional net funds for capital repairs. Additional details on this study are being presented in a separate report to the UEDC.

Another suggestion made by the North York Community Council concerned exempting a conversion proposal where in-situ tenants want to buy the building. I have suggested a change which could give tenants in high-end buildings some choice about proposed conversions, and have put forward an optional policy which Council may choose to adopt to provide an exemption for the conversion of some equity co-operatives, where tenants support the application. While I believe that this approach, in part, would address the North York Community Council's motion, I feel that above situations are very unique and deserve special attention. Given the tremendous pressures being placed on it, I would not recommend that such an exemption be provided for the bulk of the rental stock, where rents are relatively more affordable.

The condominium market is very vibrant with a wide range of prices. A Royal Lepage report indicates that in April -June 1998, the price of a standard two bedroom condominium apartment ranged from $93,000 in central Scarborough to $243,000 in the Annex. The Toronto Star advertised new condominium apartment prices ranging from $69,000 to over $2,000, 000 in 1998. There are alternatives available to tenants if they want to purchase a condominium. Again, while home ownership is a worthwhile goal, it should not be achieved at the expense of the City's affordable rental housing stock, particularly given the lack of affordable housing now being produced.

Another point I'd like to stress concerns the Community Council's suggested exemption for the purposes of "good planning". Good planning pertains to both the physical development of a given site and its relationship to the local environment. Equally important is the City-wide implication of any development. Protection and preservation of the rental stock is a City-wide priority as clearly articulated by the Mayor's Homelessness Action Task Force. A loss of rental housing in communities throughout the City will undoubtedly have an adverse impact on the supply of rental housing in general. Given the extremely low vacancy rates we are facing, coupled with the increase in evictions and the number of people living on the streets, we cannot afford to consider further exemptions to the policies, at this time.

(g)Further Report on the High-Rise Maintenance Inventory

The UEDC had also requested that the Commissioner of Community and Neighbourhood Services, in consultation with the Commissioner of Urban Planning and Development Services, report to its February 8, 1999, on the status of:

(I)the 'High Rise Maintenance Inventory' report (or formally known as the "Condition Survey of the High Rise Rental Stock in the City of Toronto), co-funded the CMHC and the City; and

(ii)the potential for developing a maintenance protection enforcement strategy to preserve and enhance the rental housing stock and protect tenants from neglectful maintenance.

This report has been submitted separately.

3.Other Suggested Changes

In a letter dated November 25, 1998 to the UEDC, Mr. Lawrence Zucker of Kagan, Zucker, Feldbloom, and Shastri suggested a minor change to the proposed policy 135.3. As this policy is intended to provide a partial exemption to allow the conversion of high-end rental units, he indicated that policy 135.3 should apply despite policies 135.1, 135.2 and 135.4 and not merely policy 135.2. I agree that this suggested change is appropriate, and have amended policy 135.3 accordingly.

1. Conclusions

This report has been prepared in response to motions made by the UEDC at a public meeting held on November 30, 1998. After careful consideration of the motions, I am suggesting that: