EOLO POLITICAL UPDATE

1. EOLO POLITICAL UPDATE September 26, 2019 By John Dickie

2. Key areas • Federal election • Tax • Housing • Energy • New CMHC National Housing Council • Provincial developments • City of Ottawa developments, especially landlord licensing

3. Federal election – October 21 • Realistically, after the election, we will have • A renewed Liberal majority government • A new Conservative majority government • A Liberal minority government • In a Liberal minority government, the NDP and/or the Green Party will have influence • therefore, I will report on the 4 parties • focusing on campaign promises (or past action) that will affect rental housing providers, but adding a few more general issues

4. Tax Policy

5. Tax Policy - Liberals • Increase the “Basic Personal Amount” from $12,000 to $15,000, thus reducing taxes for most taxpayers, with an emphasis on lower income taxpayers. The increase is to be phased out for taxpayers earning $147,000 and more. • Considered but rejected raising the capital gains inclusion rate to 75% from 50%. • Brought in a grind down of the low rate of income tax on active small business income when investment income exceeds $50,000 per year. • Made and later reneged on a promise to remove the HST on new rental construction. • There is a rebate on GST for rental construction at below $450,000 per suite.) • May consider better tax treatment for major repairs in rental housing (e.g. higher efficiency furnaces).

6. Tax Policy - Conservatives • Reduce the federal tax rate on the lowest income bracket from 15% to 13.75%, thus reducing taxes for all taxpayers. • Will roll back the revisions to the small business tax reforms. • May begin another review of the classification of rental income which currently takes it out of the small business class. (The previous review died quietly when the Liberals came to power.) • May consider better tax treatment for major repairs in rental housing (e.g. higher efficiency furnaces).

7. Tax Policy - NDP • Raise the federal tax rate on income over $210,000 from 33% to 35%, which would raise the highest total rate in Ontario from 53.53% to 55.53%. • Raise the capital gains inclusion rate from 50% to 75%. • Impose a “super-wealth” tax of 1% per year on wealth of over $20M. • Roll back corporate tax cuts back to 2010 levels, i.e. making the normal federal rate 18% instead of 15%. • Remove GST/HST on the construction of new rental units.

8. Tax Policy – Greens • Restore tax incentives for building purpose-built rental housing. • Remove the “deemed” GST whenever a developer with empty condo units places them on the market as rentals. • Review the tax system with a view to eliminating “loopholes for the wealthy”, including raising the capital gains inclusion rate from 50% to 100% for corporations or individuals with a net worth of more then $3M, not including principal residences • Increase the general federal corporate tax rate to 21%.

9. Federal Income Tax Payable (The dashed lines add a one-time capital gain of $200,000 averaged over 5 years)

10. Federal Income Tax Payable (The dashed lines add a one-time capital gain of $200,000 averaged over 5 years)

11. TOTAL FEDERAL INCOME TAX INCLUDING A ONE-TIME $200,000 CAPITAL GAIN

12. Housing Policy

13. Housing Policy - Liberals • Are funding new rental construction with a modest affordability component for $14B over 12 years at low interest rates under the Rental Construction Financing Initiative (RCFI). • Are funding retrofits to social housing. • Are offering funding to private sector rental housing with significant requirements for affordability and accessibility. • Are creating and funding a Portable Housing Benefit in negotiation with the provinces. • Will impose a 1% annual vacancy tax on homes owned by non-Canadians who do not live in Canada. • Will increase the purchase price eligible for the new CMHC-backed shared equity mortgage known as the First Time Home Buyer Incentive from about $500,000 to just under $800,000 in metro Vancouver, Victoria and Toronto.

14. Housing Policy - Conservatives • Will facilitate new homeownership (which would reduce the pressure on tight rental markets), including re-working the stress test and re-introducing 30 year terms for insured mortgages for first-time home buyers. • Will work with the provinces and municipalities to reduce regulatory barriers that discourage new housing construction. • Have used cash benefits as their preferred policy tool for supporting households (e.g. for child care). • Have sought to reduce the federal role in housing.

15. Housing Policy - NDP • Wil add $5 billion in additional funding for affordable housing in the first year and a half in office. • Will build 500,000 new social housing units over 10 years. • Will re-introduce 30 year terms for insured mortgages for first-time home buyers. • Will implement a 15 per cent foreign buyers' tax on purchases of residential property by foreign corporations or people who are not citizens or permanent residents.

16. Housing Policy - Greens • Restore “tax incentives for building purpose-built rental housing”. • Reduce the emphasis on encouraging home ownership, and instead encourage purpose-built rentals. • Invest in the co-operative housing sector to boost the affordable housing market by 25,000 units per year. • Add $750M to the funding for portable housing benefits to assist 125,000 households. • Will adopt guaranteed livable income to reduce cash-only underground economy aimed to eliminate claw back of poverty payments.

17. Energy Policy

18. Energy Policy - Liberals • Use a federal carbon tax in provinces which do not levy a carbon tax, returning 90% of the money to consumers, with 10% to some entities (with no special consideration for rental providers, who pay for the carbon tax). • Through the LEEP, NRCan is taking steps to facilitate and encourage retrofits to reduce the carbon footprint of rental buildings.

19. Energy Policy - Conservatives • Have promised to abolish the federal carbon tax, and place limits on fuel usage by large emitters. • Steps to facilitate and encourage retrofits to reduce the carbon footprint of rental buildings may well continue, as they did under the Harper government.

20. Energy Policy - NDP • Offer rebates for purchasing energy efficient vehicles. • Electrify transit and other municipal fleets by 2030. • Power Canada with net carbon-free electricity by 2030 and move to 100% non-emitting vehicles by 2050. • Continue carbon pricing and rebates that fall under the federal backstop. • Rollback carbon pricing breaks to big polluters.

21. Energy Policy - Greens • Reduce GHG emissions by 60% by 2030 and to zero by 2050. • Mandate energy retrofits for all buildings by 2030. • Introduce revenue-neutral price on carbon pollution through a fee and dividend system. • Phase out coal-fired electricity.

22. LEEP • Natural Resources Canada has a Local Energy Efficiency Partnerships (LEEP) team, turning their attention to alterations to existing buildings (retrofits or renewals), with an initial focus on re-cladding systems for wood-frame multi-unit housing. • LEEP will organize field trials • LEEP will produce reference documents such as “Technology Assessments” and “Builders Decision Guides” • LEEP will develop interactive costing tools for various high-efficiency renovations. • Please contact me if you or someone from your company would be willing to attend a preliminary meeting to discuss the information that would be most useful for you to receive.

23. New National Housing Council • The government is creating a new National Housing Council (NHC) • to support “the progressive realization of the right to adequate housing, as recognized in the International Covenant on Economic, Social and Cultural Rights”, and • to promote accountability, participation and inclusion in housing “in keeping with a human rights-based approach to housing”.

24. CMHC is seeking applications from a broad cross-section of • experts in housing and human rights, • leaders from the not-for-profit and private sectors, academia, • housing providers, • service providers, • women, the LGBTQ2S community, Indigenous peoples, persons with disabilities, racialized communities, and people with lived expertise of housing need or homelessness.

25. NHC Details • Individuals will be selected as members of the Council • for a three year term, • based on their expertise and knowledge, not as a representative of an organization. • Travel within Canada will be required and paid for. • About 12 days of work will be required each year. The Council will pay for that work.

26. NHC Details • The public call for applications is open untilOctober 14, 2019. • For more information, contact me at president@cfaa-fcapi.org, best by October 8.

27. Provincial developments • Bill 108 was passed to make housing developments more certain and less slow • FRPO and EOLO made comments on the regulations • The delays at the LTB in Ottawa are bad and still getting worse • Although the delays have stabilized in other areas • The Province has largely filled the vacancies among the adjudicators, but vacancies still occur • The Province still says it will re-look at the RTA • The timing is unclear

28. City of Ottawa • The key issue is the rental regulation review, considering • landlord licensing • Landlord registration and inspections • Enhanced by-law enforcement

29. Background • In all or parts of four Ontario cities, small landlords have to pay annual licensing fees of $200 to $600 per unit • In Toronto, landlords with 10 or more units, must pay an annual fee of $12 per unit • Much paper must be filed with the city, including: • Deed • Proof of insurance • Clear criminal record check • Maintenance and parking plans • Building plans • Capital repair plans • Elevator maintenance plans and contracts

30. Background • In Ottawa, the demand for landlord licensing has been driven by: • ACORN (Association of Community Organization for Reform Now) • Homeowners near the universities and colleges, who hate the extent of student renters in their vicinity • A few left wing Councillors

31. The consultation process • The City of Ottawa has engaged a team of consultants to advise on options • They will probably recommend either • a pilot landlord registration project in one or more limited areas or, • enhanced by-law enforcement. • EOLO says that more effective by-law enforcement is a far better choice.

32. EOLO’s actions • EOLO engaged with landlords to inform them about the issues and the consultations • EOLO made two 20-page written submissions to the consultants and City staff: • one after the initial discussion papers, and • one after the Rental Housing Policy Options paper. • EOLO has met and discussed the issues in detail with: • City staff • Mayor Watson’s key staff people • Key Councillors

33. The key issues in deciding good policy • Is the rental quality problem serious and widespread? • What specific things does the City want to achieve? • Improving ineffective enforcement • Gaining entry • Financing more inspections • Addressing deficiencies in LTB enforcement • Helping fearful tenants enforce their rights

34. Is the rental quality problem serious and widespread? • EOLO says the quality problem is usually not serious and is not widespread • The City staff agree with EOLO • See their “Property Standards in Rental Housing” at page 7 • The consultants agree with EOLO • The consultants’ Policy Options report states that only “a small minority of rental housing” is “in poor shape” or run by “landlords who are not responsive to tenant needs” (page 24).

35. How can the city achieve the specific things the City wants? • Solutions other than landlord licensing or registration to • Improving ineffective enforcement • Gaining entry • Financing more inspections • Addressing deficiencies in LTB enforcement • Helping fearful tenants enforce their rights • EOLO says all of those goals can be met by means better than landlord licensing or registration

36. Improving ineffective enforcement • Enhanced enforcement should follow these rules: • Landlords should have a means to provide the City with contact information for informal, expedient notices, which can be property managers. • The person at fault (whether tenant or landlord) should be given at least a short time to correct a deficiency. • When the City can tell that a tenant is at fault, the notice should go to the tenant, and if there is to be a fine, it should go to the tenant. • Otherwise the notice needs to go to the landlord or the property manager.

37. Financing more inspections • Rental housing makes up 34 per cent of the City’s dwelling units, but is responsible for only 18 per cent of property standards calls. • The City could hire three more inspectors to address rental housing issues before reaching the load that homeowner-to-homeowner calls place on property standards enforcement. • If the City insists on raising money from landlords, then the money should come from fees for re-inspections and fines on those who knowingly violate the by-laws

38. Helping fearful tenants enforce their rights • Some tenant advocates say tenants are afraid to apply to the LTB or to call property standards because they are afraid of retaliation from their landlord. • What is your experience? • If there is concern that vulnerable tenants do not know their rights or are afraid of their landlords, the better solution is: • the City should provide (more) funding for Action-Logement and Housing Help.

39. Conclusion to the arguments • EOLO submits that neither licensing nor mandatory registration should be imposed on rental housing because: • Licensing or mandatory rental registration would reduce rental supply and increase rents, and • the concerns that are driving the demand for those steps can be addressed through less problematic and less expensive alternate approaches that generate much less risk of a reduction in the rental supply and higher rents.

40. Next steps • The City will release: • the results of the second on-line consultation • the consultants recommendations • The media will report on those • EOLO and others will lobby Mayor Watson, City Councillors and City staff • City staff will hold consultation meetings on Oct 22 and 23

41. Next steps • City staff will release their recommendations on Nov 4 • EOLO and others will lobby Mayor Watson, City Councillors and City staff • EOLO will engage landlords as needed • CPS Committee will meet on Nov 15 (a special meeting) to make its recommendations • Council will decide, probably on Nov 27

42. Conclusion • For more information, or if you have any further questions, please contact John Dickie at jdickie@dickieandlyman.com • Visit www.eolo.ca for a complete copy of the two EOLO submissions, and an update on the status of the issue.

43. Questions?