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Minto tenants say rent hike 'not justified'

Developer cites higher utility costs and extensive repairs for increases of up to 13.49 per cent for some residents; Critics say Tenant Protection Act gives landlords the freedom to do what they want

Ottawa Citizen - January 30, 2002
by Mohammed Adam

Ninety-eight dollars may not seem like a lot of money, but it is enough to leave Gale Watson, Lorraine Knapp and hundreds of others wondering if they will be able to afford the roof over their heads.

Blaming building repair costs and large increases in utility bills, Minto Developments, Ottawa's largest landlord, has sent notices of rent increases of as much as 13.49 per cent to Bayshore tenants whose leases are up for renewal. Some of the increases took effect in October and others are due in February.

The west-end tenants, many of them on pensions or limited incomes, are worried about where they are going to find the extra cash. Some, like Nelson Powers and Ruth Drake, whose leases expire in months but who haven't yet received any notices, told the Citizen they are dreading rent increases they can't afford.

Critics blame the Tenant Protection Act, which was passed by the Harris government in 1998, after the abolition of rent control, to protect renters from being gouged by landlords. Instead, say critics, the act has given landlords the freedom to do what they want.

Figures from the Ontario Rental Housing Tribunal show a dramatic jump in requests for higher rents.

At the end of 1999, the first full year after the law came into effect, there were 50 requests in Ottawa for rent increases above the provincial cap. By 2000, the number had gone up slightly, to 54. Last year, requests from landlords for higher rents ballooned to 292.

Ms. Watson, who pays $730 a month for her one-bedroom apartment, faces a $98.66 rent increase. Unemployed and looking for work, she said she can't afford $829 a month.

"If the tribunal accepts this increase, I am going to have to leave and I don't know where I am going to go," said Ms. Watson, 41, a former federal employee. "This is the second time in a year that they are asking for rent increases."

In a letter to the rental housing tribunal, Qingyuan Qu, another tenant, pleaded for a break on the 13.49-per-cent rent increase sought by Minto.

"I was laid off from my full-time position four months ago and since then I have been unable to find employment in Ottawa. I have a wife and a kid to take care (of) and, under these circumstances, I am finding it difficult to cope with the current house expenditure," wrote Mr. Qu, a former Nortel employee.

"I am counting on your tribunal to protect the tenants and turn down the 13.49 (per cent) rent increase."

Mr. Qu, who faces a $107 rent hike, accused the Conservative government of standing idly by as landlords drive people into the streets.

"This increase is not justified. They just want to get the residents out so they can increase the rent even more for new tenants," he said.

"The government cannot keep quiet about something like this. What do they want? People living in the streets?"

But Minto and developers are within their legal rights to demand increases. Under the Tenant Protection Act, landlords can raise rents annually by a fixed rate determined each year by the province to cover increases in the cost of business. This year, the cap is 3.9 per cent. Last year, it was 2.9 per cent.

On top of that, landlords can, with the approval of the rental housing tribunal, increase rents above the cap. These are called "above-guideline increases" and they cover such capital improvements as new roofs, balconies and boilers, as well as increases in municipal taxes, hydro, water and gas.

"We have made, in some cases, applications for above-guideline increases because we've done major repairs in the buildings or we've had hydro increases or gas increases," said Minto president Roger Greenberg.

Minto owns or manages about 10 per cent of the city's 100,000 rental units. Mr. Greenberg said Minto is not increasing rents indiscriminately around the city.

"If I were a tenant, and I speak to four friends of mine and they are all getting increases, I'll say 'Oh, Minto is increasing rents everywhere.' But that's not true," he said.

"There are a lot of units (for which) we are lowering rents. We reduced rents in Sophia 2, a building in Valley Stream Village (in Nepean) and a community called Aspen Village in Orleans. And through November-December, in order to encourage people to rent, we gave away 250 free DVDs."

Mr. Greenberg said rents of comparable units often vary because, under the law that came in four years ago, landlords have more leeway to charge market rates.

"If someone is in a unit that's substantially below market, they are going to face a rent increase when their lease comes up for renewal. But if somebody just moved in say, six months ago, the rent may already be at market, so they aren't going to pay an increase," he said.

"Every unit will move to the market. It is not a question of one-size fits all where it is all tightly regulated. Rents will go up and rents will go down."

Minto is not alone. Commvesco Levinson-Viner, Homestead Landholdings and Chelsea Apartment Management Ltd. are among large landlords that have increased rents between two per cent and six per cent. (Figures for Urbandale Corporation, Regional Realty, Glenview Corporation and others were not available for this story.)

Mary Garrett, a tenant advocate, said the law is on the side of landlords who "are out to make the biggest profit." She is convinced "legislation is written to allow them to get any increases they want," something she calls a form of "legal gouging."

But John Dickie, an Ottawa lawyer and chairman of the Eastern Ontario Landlords Organization, said tenants cannot complain about rent increases now when they enjoyed low rents without any protest for years. He said it is fair to ask tenants to pay more when costs go up.

"From 1992 to 1997, the average rate in the city did not go up. For five years, there was some inflation, wage increases, but rents stayed the same. In 1998-99, landlords had the right to charge $800 for one bedroom) but could charge only $600 because the market was low," said Mr. Dickie.

"Now rents are going up. It has been higher in 2000 and 2001 but in '98-99, the rents were lower and tenants didn't complain."

Mr. Dickie said provisions in the 1998 Tenant Protection Act allowing landlords to recoup costs have breathed life into the industry. He said Ontario government figures show that while in 1995 the average capital expenditure per unit in the province was $400, it tripled to $1,200 by 2000 -- proof that landlords are now spending more money to improve their buildings.

"The act was intended to restore viability in the rental housing industry. For years before it came in, landlords were not building. It has restored viability to the industry," he said.

Lorraine Knapp, 72, who lives in a one-bedroom apartment, faces a 13.49-per-cent rent increase. If her landlord's application to the rent tribunal is successful, her apartment will soon cost her $82 a month more, or $692 a month.

Being on a fixed income, she said, she cannot easily afford the increase.

"I have been here 17 years and I don't have much of a choice. You can't get anything any cheaper, so you have to pay," she said.

"I only earn $1,500 a month, so this is almost half my earnings. I don't know what, but I am going to have to do without something."

With her rent going up 6.89 per cent, or $44, Joan Mccord, a Second World War widow, is one of the lucky ones. But she says it is going to hurt.

"You have to do without something. Everything is going up, but our pension is not going up," she said.

Several tenants are particularly incensed at the increases because they say their apartments are not well-maintained. The catalogue of complaints includes lack of hot water, poor heating, leaking garages and elevators that often don't work.

"I am cold in my apartment, half the time my hot water is cold or lukewarm," complained Ms. Watson. "One and half years ago, my garage was leaking and it took four months to repair. I couldn't use it, but I still had to pay $45 a month for it. We are not getting the services and we still have to pay extra."

In its application to the tribunal last August for a 3.9 per cent above-guideline increase at 90 Woodridge Cres., a 260-unit apartment building, Minto blamed an "extraordinary" increase in utility costs for the request.

Because of a staff shortage and the ensuing backlog of applications, a hearing has not yet been scheduled.

In documents submitted to the tribunal, the company explained that from June 1, 1999, to May 31, 2000, it paid $74,899 for heating. Over the same period in 2000-01, the bill had more than doubled to $167,997. The hydro bill decreased slightly, going from $99,476 to $98,780 over the same period. And the cost of water went from $71,043 to $80,901.

Overall, the utility bill rose to $347,678 last year from $245,418 the year before. But under a complex formula that requires landlords to take into account the automatic 3.9-per-cent cost-of-living increase allowed by the province, Minto calculated its utility costs to have gone up by another 3.9 per cent, bringing this year's increase to 7.8 per cent.

For some, increases for the cost of repairs, which are now coming due, raise the increases to more than 13 per cent. (In June last year, Minto requested, and got approval from the tribunal, for a 6.4-per-cent over-the-cap increase to cover major repairs for such things as the elevator, roof, boiler, garage and balconies.)

Records for 25 Woodridge Cres., another 260-unit Minto apartment building in Bay-shore, show that in August last year, the company asked the tribunal for approval for rent increases of 3.4 per cent above the cap because of high utility costs.

According to documents filed by Minto, heating costs at the building shot up to $188,327 last year (June 1, 2000 to May 31, 2001) from $93,727 the previous year.

Over the same period, hydro costs went down to $101,976 from $106,183. And the water bill also decreased to $89,084 last year from $90,738 the year before. No hearing has been held on the proposed increases.

For higher utility costs and major renovations and repairs done on 181 garden homes on Woodridge Crescent, Minto also received approval from the rental housing tribunal for a 5.2-per-cent over-the-cap rent increases in August last year.

But the rent increases were not limited to west-end apartment buildings, nor to Minto.

Records at the rental housing tribunal show that Minto is one of several companies that asked for above-guideline rent increases to recoup costs of major repairs or increases in utility bills.

In September last year, Commvesco Levinson-Viner, one of the top three renters in the city, got permission for a 6.4-per- cent above-the-cap increase at its 50-unit complex at 250-254 Cooper St. The rental housing tribunal approved a 2.1-per-cent increase for higher utility costs and 4.3 per cent for major repairs and renovations.

Documents filed with the tribunal show that in one year, utility costs rose to $48,217 from $37,360. Commvesco also said it spent about $193,561 on, among other things, masonry, fire prevention, painting and new light fixtures.

Also in September last year, Commvesco was allowed to increase rents for 51 rental units at 1196 Shillington Ave. by 4.3 per cent over the cap because of increases in municipal taxes, utilities and major repairs. Last year, the cost of utilities -- heating, hydro and water -- increased to $38,274 from $29,287 the previous year.

Documents also show that, blaming higher utility costs, Homestead Land Holdings, another large landlord, applied for permission to increase rents by 1.46 per cent on 201 units at 2700 Saratoga Place in Gloucester. The increases were to begin Dec. 1 last year. Utility costs jumped to $254,437 from $222,448.

Higher utility costs were also Chelsea Apartment Management's justification for a 3.3-per-cent rent increase in September last year on 54 rental units at 283 MacLaren St. In its request to the rent tribunal, Chelsea said its utility costs rose to $50,248 in the year ending April last year from $36,371 the year before.

The debate over rent increases aside, Alain Miguelez, a market analyst with the Canada Mortgage and Housing Corporation, said the cloud that shadowed the Ottawa rental housing market is gradually lifting.

The vacancy rate, which was an anemic 0.2 per cent in 2000, the lowest in the country, had crept to 0.8 by the end of last year. Though still the lowest in Ontario, Ottawa has moved up to third-lowest in Canada. The vacancy forecast for 2002 is a healthy 1.2 per cent, according to CMHC.

Mr. Miguelez said rent increases are also bottoming out. In 1999-2000, the average rent increase for two-bedroom units was 12 per cent. But by last year, it had fallen to 4.2 per cent. This year, CMHC is projecting an average 3.4-per-cent increase. Still, the city remains third on the list of cities with the highest rents, largely because of a robust economy and an influx of immigrants.

"The only other cities it is more expensive to rent (in) are Toronto and Vancouver," said Mr. Miguelez.

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