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NEW CITY OF TORONTO ACT COULD MEAN MUNICIPAL RENT REGULATION

Article by Bob Aaron

The Province of Ontario has introduced Bill 53, the Stronger City of Toronto for a Stronger Ontario Act, and it may have significant impact on landlords in the province. 

When the law is passed - possibly sometime this spring or early summer - the City of Toronto would be given broad authority to levy new taxes subject to certain limitations. 

Wide powers contemplated 

Under the legislation, the City will have wide new powers over:
• Economic, social and environmental well-being of the City
• Health, safety and well-being of people in the City
• Protection of people and property, including
consumer protection
• Business licensing [read: landlords]

Although municipal by-laws would not be able to conflict with provincial legislation, the City could introduce a wide range of licensing and even rent control. MDSA is reviewing the legislation now, but it is likely that it could allow the City to introduce its own version of rent control and tenant protection - on top of the provincial laws.

Rental licensing exemption to disappear

At present, the rental housing industry is exempt from municipal licensing, but this exemption will be effectively removed under the new law.

The city would not be able to impose a sales tax, income tax, wealth tax, gasoline tax or hotel tax. But there is no limitation on the proposed ability to enact a municipal land transfer tax or levy licensing fees on landlords, builders, lawyers, real estate agents, insurance brokers, movers, renovators, property managers, paralegals, or others in similar housing-related fields.

A Toronto-only land transfer tax could skew the apartment market to the area outside the GTA if it was applied, for example, to apartment buildings and other rental properties on the south side of Steeles Ave., In Toronto, but not the north side of the street, outside the GTA.

“A Toronto land transfer tax would be counterproductive," said John Meehan, president of the Toronto Real Estate Board. "Many people are already choosing to live outside of the city because they simply cannot afford to live here. A Toronto land transfer tax would make this situation even worse, which in turn would mean less growth in Toronto's taxable assessment base and more urban sprawl resulting in increased commuter gridlock, pollution and frustration levels.”

What about other taxes? Stephen Dupuis, executive vice-president of the Greater Toronto Home Builders’ Association, said recently that "in the last few years, the city has substantially increased its development charges, parkland dedication and planning approval fees. It's hard to imagine what else they could tax, but they've proven themselves to be very creative in the past.”

Some possible new taxes include levies on parking lots, entertainment, liquor, tobacco, garbage collection, and others limited only by the imagination of city politicians.

Conversion and demolition prohibitions

The Act would give the City extremely wide powers to regulate and prohibit demolitions and conversions of rental housing. There is every reason to believe the City would use this power in order to virtually prohibit all demolitions and conversions

City plans uncertain

Phillip Abrahams is manager of intergovernmental relations at Toronto city hall. He said recently that it would be premature to contemplate what legal powers are going to be used or what policies implemented. Before the city adopts any policy on anything financial or regulatory, Abrahams noted, "the city would engage in a fulsome review of the options." The city would not develop policy without "thoughtful consideration." Whatever that means. 

Tobias Novogrodsky, a consultant in the city's corporate management and policy department, told me that the goal behind the legislation is to raise new money in new ways in order to lessen the property tax burden on homeowners.

Tory says Toronto has $500 million shortfall

When Bill 53 was introduced at Queens Park, opposition leader John Tory told the legislature that the city has a $500 million budget shortfall. The new City of Toronto Act, he said, would let the government "reach inside the pockets of Toronto taxpayers for what might be $50 million," leaving the restof the shortfall for "some other day."

Bill 53 will allow the city more "independence of action," said Tory, "but Toronto will still face a shortfall of several hundred million dollars come budget time and will still continue to ship its tax dollars to Ottawa.”

Landlords potential source of new tax dollars

Just how many of those tax dollars will come from the owners or buyers of multi-residential properties remains to be seen. Given the huge budget shortfall, however, regulating and taxing providers of rental housing might just be too tempting to resist. 

John Gerretsen, minister of municipal affairs and housing, told the Toronto Star recently that many of the powers in the new City of Toronto Act would be given to other Ontario municipalities in the upcoming changes to the Municipal Act.

Toronto’s politicians have never been disposed to favour the rental housing industry. With these proposed new powers, life as a landlord could get much worse.

MDSA is monitoring the situation and will make appropriate representations to government when the opportunity arises.

For More Information:

Bob Aaron
E-mail: bob@aaron.ca


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