Oshawa Rejected Rental Licensing in 2023

New Licensing legislation has hit neighbour cities like Kingston and Brampton, in Ontario. What happened to Oshawa in the past?

Author: Chris Seepe

Published: October 10, 2023 | Updated: January 2, 2024

On September 18, 2023, Oshawa’s City Council voted 5 to 3 to reject its Safety Committee proposal to implement a city-wide rental property licensing program that first proposed to double Oshawa's By-Law Enforcement Dept. staff at an originally roughly-estimated cost of $5 million per year, to be paid entirely by Oshawa’s housing providers. This highly controversial agenda was pushed forward for over three years, and according to one councillor for over five years.

Over three years, many delegations of speakers from individual property owners and landlord associations from Oshawa, Toronto, Quinte (Belleville) and across Ontario participated in educating the city about the severe consequences that would arise from a city-wide rental property licensing program. A petition to stop this action was also signed by 1,950 supporters. Details on the current court action against the City of Windsor was also submitted. The city's rejection decision is a testament and tribute to what can be achieved with the collective action of engaged housing providers and their associations who represent the voices of many housing communities.

I was waiting for the official minutes of the meeting but after nearly two weeks and no response from the City Clerk to my minutes status inquiry, I instead watched the meeting video and took notes, which I have appended below along with their timestamps. I’m using the video as the basis for the rest of this article.

Big Win?

Some housing providers and landlord associations viewed this city council decision as a win for housing providers. True, it put to rest the proposal of formal licensing in Oshawa and possibly in other Ontario municipalities. This rejection ended many potential legal issues such as not receiving a license to rent while a tenant occupies the rental unit. The RTA doesn’t permit eviction for licensing non-compliance so does the city just fine the housing provider forever for the supposed by-law infraction or otherwise force the housing provider to make a change regardless of the cost (which costs by-law officers routinely ignore)?

Informed Speculation – “Oshawa Safe Housing” program

I admit upfront that some of what I’m writing next is “informed” speculation," meaning I’m considering a variety of sources and influences when I write that this battle may be won but I don’t think the practice of invasive, expensive (for housing providers) martial inspections, audits and heavy punitive fines is going away. Oshawa, especially its by-law dept., has a long history of looking for municipalities that have been “successful” in implementing controversial programs that align with the city’s agenda. With respect to licensing, you only have to look at neighbouring “RentSafeTO” to speculate what the pending nebulous “Safe Housing Oshawa” program might look like. This latter program was mentioned at least twice during the city council's voting deliberations on licensing. I did an Internet search on these words and there were zero results.

RentSafeTO

Toronto’s RentSafeTO scheme uses bylaw enforcement officers to conduct building “evaluations,” “audits” and the traditional investigation process of complaints submitted to 311. Building owners of all apartment buildings in Toronto with three or more storeys and ten or more units must “register” with the program and renew annually. While this is not a license per se, it still remains a huge overreach of proactive, invasive municipal enforcement. View RentSafeTO fees and fines.

The 2023 registration and renewal fee is $15.40 per residential unit and includes city-initiated building evaluations. A city building audit has an administration fee of $2,030.54 plus an audit inspection fee of $122.74 per hour per officer. Under this structure, there’s no time limit and no disincentive for a by-law or other inspection officer to be efficient in their investigation. So, this fee structure is open to significant potential abuse and power manipulation. A re-evaluation fee is $329.81 per registered building.

FYI on 2024 rates:

City-Owned Rental Properties Exempted

Hypocritically, but to be expected, the very worst rental properties that rarely meet property standards and currently have billions of dollars in backlog capital repairs, are owned by the city … and are exempted …

Fees are waived for social housing providers … Toronto Community Housing Corporation, non-profit housing provider of assisted or social housing under a program administered by the City of Toronto, and dedicated supportive housing provided funded [sic] by the Province of Ontario.

Seriousness of RentSafeTO By-Law Infractions

The SafeRentTO webpage depicts “all” the investigation activity in the city but search results max out at 2,000. A random review of cases across the city included a huge number of “long grass” cases, followed by “zoning” investigations. A large number were simply titled “property standards” with no explanation and the next most common group was “waste.” View the Investigation Activity site and map.

Licensing Effectiveness (by example)

The Oshawa licensing reports never once provided independent, objective and quantifiable data to justify the significant costs to implement and operate the city-wide licensing program.

R.H.E.U.

However, one of my readers sent me a link to a report that originally appeared on The Trillium, a Village Media website devoted exclusively to covering provincial politics at Queen’s Park.

View 'Ontario's Rental Enforcement Unit Probes a Fraction of Calls Received' article

A freedom-of-information request for the Rental Housing and Enforcement Unit (RHEU), which is a department of the Ministry of Housing (not the Attorney General) that handles complaints of RTA breaches of every kind except non-payment of rent, resulted in the analysis of the practicality and effectiveness of government-driven housing investigations. In the 2022–23 fiscal year, RHEU received 16,394 calls. It resolved 1,452 (8.9%) with one phone call from the ministry to the breaching party, or the case was closed for other reasons. Only 219 cases (1.3%) were formally investigated. Of those, 21 were prosecuted resulting in 17 convictions. No action appears to have been taken on the remaining 14,723 calls (89.8%).

Click image to enlarge. The image is obtained from the OrilliaMatters.com article written by Jack Hauen depicting 'RHEU data for fiscal year 2022-23. | Ministry of Municipal Affairs and Housing'. Openroom modified the image for easier reading and specific callouts.

Ottawa Property Audit

An excellent Rental Accommodations Regulation Study dated May 09, 2019, was conducted by Maclaren Municipal Consulting Inc. on behalf of the city of Ottawa (not Oshawa). Over 100,000 rental units were anlyzed during a ten year period. 91.4% of properties didn't receive any property standards complaints. 51 properties out of 100,000 (0.051% or half of one percent) rental properties received 21+ calls during the 10-year period.

Comparison

I’d be willing to bet that an analysis of RentSafeTO or any other municipal licensing or rental housing auditing scheme would result in a mirror image of the RHEU and Maclaren reports. Government, especially municipalities, ALWAYS think that the “hammer and gavel” (fundamentally totalitarian) approach to governance will solve everything. It rarely ever does. The most effective governance solutions are ALWAYS built on an agreed-to set of objectives that reflect the common interests of all stakeholders involved. Of course, this consensus is a much more difficult objective to achieve but, without that investment, those who perceive to be the aggrieved or “targeted” party will always look for a way to circumvent the policy rather than work towards mutually beneficial compliance. And as government retaliates with more heavy-handed actions, the aggrieved parties respond more aggresively, ultimately escalating the conflict. A primal theme throughout world history teaches this unlearned lesson myriad times.

What To Do?

In my last speech to Oshawa’s Safety Committee, I pointed out the hypocrisy and conflicts of interest the city has with the city-wide rental housing licensing program. I finished the speech by stating that (Read my full 8-minute speech),

“… if I truly believed everything that I have conveyed to you today and previously, it would be in my own best interests to stop resisting the city-wide licensing program … I’m setting aside those efforts and will concentrate on maximizing the business advantages that I believe will fall out of your licensing program, which will yield higher returns for me in the long run as a private sector housing provider in Oshawa than any of the licensing fees you might extract from me in the short term.”

APPLIED TECHNOLOGY

I’m personally focusing on applying all the technology I can find to transfer as much of the day-to-day operational costs to tenants to reduce the significant negative impact that government licensing and, heaven forbid, vacancy control may have in the near-term. The more that tenants pay for what they use, the less the impact of uninformed and foolishly short-sighted legislation and by-laws will ultimately have on cash flow, which I believe it arguably the single greatest concern every rental property owner has.

Very briefly, such technologies include cashless laundry, electricity and water suite metering, dedicated hot water tanks attached to the tenants electricity panel, direct-to-tenant water billing, automated tenancy application, semi-automated tenancy qualification, automated tenancy agreement creation, semi-automated N1s and N4s from the same tenancy database, container homes on excess land, solar panels and horizontal wind turbines, direct-to-tenant electricity billing, water source heat pumps to replace gas-fired water boilers, and hopefully one day smart locks, battery storage, and EV charging retrofitted in older buildings using load balancing.

ABOVE GUIDELINE INCREASE

Also, there appears to be legal precedence and legislation that permits Ontario housing providers to apply for an AGI to recover licensing fees.

The LTB document here Click to read Tribunals Ontario Applications for Rent Increases Above the Guideline …states that “A landlord may make an AGI application in any of the following situations: There has been an extraordinary increase in the cost for municipal taxes and charges [bolding by me] for the residential complex or any building in which the rental units are located. See RTA s. 2(1), s.126(1).1, s.126(2) and O.Reg 516/06, s.28, s.29 and s. 41;

A second LTB document here: Click to Read from Tribunals Ontario states,

Municipal taxes and charges include:

taxes charged to a landlord by the municipality (which include education taxes)

charges levied on a landlord by the municipality

taxes levied on a landlord's property in unorganized territory

Municipal taxes and charges do not include:

charges for inspections done by a municipality related to an alleged breach of a health, safety, housing or maintenance standard

charges for emergency repairs carried out by a municipality

charges for work in the nature of a capital expenditure carried out by a municipality

charges for services, work or non-emergency repairs performed by a municipality related to the landlord's non-compliance with a by-law

penalties, interest, late payment fees and fines

any amount spent by a municipality to arrange for vital service for a rental unit in accordance with a vital service by-law plus an administrative fee of 10 per cent of that amount

There doesn’t appear to be an explicit statement for charges for inspections done by a municipality that results in no breach being found. I would argue then the unwarranted inspection or audit is a “levied charge” by the municipality that can be recovered from tenants, but this is ultimately a question for the courts.

An increase in municipal taxes and charges is considered “extraordinary” if it is greater than the annual rent increase guideline plus 50 per cent of the guideline. For example, if the first rent increase requested in the application took effect on September 1, 2020, then the 2020 guideline of 2.2% is used. To be considered “extraordinary” …

2.2% x .50 (50%) = 1.1%
2.2% + 1.1% = 3.3%

… the increase in taxes would have to be 3.3% or greater.

APPENDIX 1 - Historical Rent Control Document

A reader sent me a copy of a “Maximum Rental Decision – Housing Accommodation” form dated 1947 04 02 (two years after WWII ended). It was issued by the Ontario Rentals Administration Wartime Prices and Trade Board. Rent control was first introduced in Ontario under the National Housing Act 1944. It was repealed around 10 years later.

Aside from the historical interest, one thing I found particularly notable is that, long before the use of computers and word processing, this standard form with typed-in, fill-in-the-blanks contained a standard increase of ten percent (which form appears to be printed annually).

The Bank of Canada inflation calculator converts $44/month to $677.94/month in 2023 (in Smith Falls, ON). The BoC website states this is a 1,441% increase over 76 years (or an average 19.0% increase per year).

APPENDIX 2 - Oshawa City Council meeting – Timestamps for Licensing Discussion

The whole meeting was about 4.5 hours. The following is the timestamp of the segment related to licensing. Watch the Video

2:58:10 to 3:00:00 – Councillor mentions five years of discussion. Safety is essential. I inferred that safety was “above all other considerations”. Question asked about whether a recommended by-law enforcement oversee committee was allowed when even councillors aren’t permitted.

3:01:41 – Licensing fees collected to pay for services. If fees are waived, who’s paying? Answer given: don’t know now but down the road costs may be reduced by reduction in complaints. Investment in staff required if not recovering fees. Also, there’s a cost avoidance through reduced impact of fires, complaints and legal activity.

3:02:39 – Chairman states, “I’m not in support of this.” “Licensing fees will cause a lot of chaos.” Voting to reject the Safety Committee proposal is 5 to 3.

3:04:40 – “The entire supported motion loses.”

3:06:20 – "The existing RRHL [Residential Rental Housing Licensing] program has run its course.” Reallocate these resources to target specific unsafe housing. “Safe Housing Oshawa” is mentioned.

3:08:50 – “You can’t leave it [RRHL] in one part of the city and not the rest.”If council wants to do this [safe housing] without the licensing then you have to eliminate it [RRHL]. “Staff can’t operate two parallel systems. It doesn’t make sense.”

3:10:20 – “Most of the cost of enforcement are being picked up right now by the taxpayers who are not causing any offenses.” “Build a system that rewards those that maintain their properties … and for those that don’t … there has to be penalties.”

3:12:00 – question asked, does new provincial legislation [presumably Bill 23] mean that licensing is a policy that Oshawa can no longer follow? Specifically, if three rental units are permitted per property, does the [provincial] legislation make our [Oshawa] policy contrary and in conflict?

3:20:00 - Staff are directed to prepare a report about the pros and cons to end the current RRHL program and to suggest how these freed up resources might be used to effect an Oshawa Safe Housing program.

One of my readers wrote that earlier in the discussions, “… they [councillors] talk about the student licensing and that they [by-law dept] now allow 2nd suites in the licensing area. Unfortunately, they [by-law dept.] didn’t tell anyone this (including the councillors and investors).”

About the Guest Author: Christopher (Chris) Seepe

Advisor to the Openroom Team | Former Commercial Real Estate Broker | Past-President of the Landlords Association of Durham.

Over Chris' 13-years career as a Commercial Real Estate Broker of Record (retired), he specialized in multi-residential investment properties. He is the owner and hands-on operator of seven multi-residential investment properties (totalling 70 units). Chris retired after 9 years as president of the Landlords Association of Durham.There are many articles on investment and "landlording" topics published nationally.

Chris has been on several radio and television interviews, podcasts, YouTube videos. Chris is a regular guest speaker and panel member for various real estate-related events including several local government initiatives. Prior to his real estate career, he spent 35+ years in I.T. marketing. He's built software publishing company from $16,000 investment to $10 million sales in six years, resulting in Initial Public Offering and winning the Canadian Government’s 1996 Canada Export Award.

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