City Staff Go From ‘Won’t’ to ‘Can’t’ in Shooting Down Calls for Landlord Licensing

Ottawa ACORN Housing

Posted on November 6, 2019

City staff are again spiking calls for landlord licensing and a regulation scheme – despite recommendations that the city implement a pilot project in three areas of the city – because they believe that provincial laws pose a “legal impediment” that prevent the city from regulating the rental housing business.

At a public consultation in late October, city staff informed residents that after a review of the rental housing market, it will not be recommending any form of landlord licensing or registration – something housing activists have been calling for for over a decade – because they believe all landlord licensing in Ontario to be potentially unlawful.
 
To study the question of rental housing regulation, the city hired Maclaren Municipal Consulting to study the rental market in Ottawa. They provided a set of recommendations meant to inform city staff’s final recommendations to council, which is set to debate the issue in November. 
 
But the move to spike landlord licensing proposals runs contrary to these consultants’ own findings, which recommends that “the City pilot a rental regulation regime in three neighbourhoods: Sandy Hill, Vanier, and the Ryan Farm area [around Algonquin College].” 
 
 “Do you honestly believe that this is going to help those people?” one resident asked city staff. “There are a lot of people who don’t have money, but they’re still human beings, and they still deserve a modicum of dignity in their homes”
 
The study found that “these are the neighbourhoods where the problems are both acute and chronic, and where it is not clear that proactive enforcement will be a sufficient solution.” 
 
None of that matters to the city, which believes that it cannot legally pass a landlord regulation bylaw at all. “As we looked into all the relevant legislation, we found a legal impediment to municipal business licensing, and the trade of real estate,” said city bylaw review specialist Jerrod Riley. (The “trade of real estate,” according to the Real Estate and Business Broker act, refers to buying and selling of property.)
 
“The impediment we’ve uncovered in our research has not been upheld in the courts,” Riley said, adding that the city had “sought an outside legal opinion that has verified that there will be a material risk to the city” if landlord licensing were to be enacted. Translation: the city is concerned about getting sued by the landlords, and wants to avoid being the one to fight it out in court.
 
This came as a surprise to housing organizers, who say this was the first time the city had ever suggested that it can’t, as opposed to won’t, regulate the rental housing market. Even more frustrating was that when pressed by members of the public, staff were unable or unwilling to provide specifics about what, precisely, that legal impediment was.
 
Housing activists with ACORN have been calling for a RentSafe program to be implemented, a model that was recently implemented in Toronto, that would require landlords to register with the city if they have three or more units and subject them to periodic property standards audits. 
 
The city’s position is that the Toronto model could not be copied in Ottawa because Toronto’s RentSafe program might also be illegal. That’s a notion that managed to elude anyone at the City of Toronto, which implemented the program in July 2017, and Ontario’s Superior Court of Justice, which upheld the rights of municipalities to license rental business in 2015. 
 
“This could impact what Toronto’s doing. I don’t know yet,” said Riley. “But we can’t advance a licensing regime at this time.” 
 
It is also news to other municipalities who have led the way on landlord licensing in Ontario. “We’re not aware of any legal impediment to rental licensing,” says Tony Iavarone, a spokesperson for the City of Waterloo. “The city’s bylaw was reviewed in court at considerable expense and was upheld in its entirety.”
 
It is not necessarily the case that there are clear and obvious legal impediments to landlord licensing that are tying the city’s hands. City solicitor David White later confirmed to The Leveller that the city is referencing a 2006 regulation that bans municipalities from licensing “the business of trading in real estate.”
 
That 2006 regulation was written prior to consequential amendments made to the Municipal Act in 2007 by the then-Liberal government. These amendments were specifically intended to grant municipalities the power to license landlords and the business of providing rental housing.
 
Again, landlord licensing schemes have existed across the province – Waterloo, Oshawa, and London all have licensing bylaws on the books – for years since the provincial government granted them those powers. And Ontario courts have upheld the right of municipalities to enact them. In 2015, the Ontario Superior Court found that “a municipality’s power shall be interpreted broadly so as to confer broad authority on the municipality to enable the municipality to govern its affairs as it considers appropriate.” 
 
But the 2006 regulation has never been explicitly tested, so it’s unclear whether or not it actually constitutes the “legal impediment” that the city claims it does. 
 
In lay terms, the 2006 regulation says municipalities can’t regulate the buying and selling of real estate, since that is governed by separate provincial statutes, namely the Real Estate and Business Brokers Act. While in the case of every other landlord licensing system in the province, the courts view providing rental housing as a business separate from the trade of real estate, Ottawa city staff fear that this regulation could be used as a legal cudgel against them if they were to implement the recommendations as they were advised. They then use this to justify the mostly deregulated status quo of rental housing. 
 
While the city believes the 2006 regulation restricts their ability to regulate the renting out of property, The Leveller was unable to find any instance of this being upheld by the courts or any prior reference to this regulation as it pertains to landlord licensing or registration. In an email, Daniel Tucker-Simmons, a housing lawyer in Ottawa, called the city’s interpretation of this regulation “ridiculous” and said that the law is clear that the trade of real estate refers to buying and selling property, not the business that happens within it. 
 
For low-income residents in Ottawa, the move is yet another slap in the face – a confirmation, for some, of their sense that the city is not interested in taking their concerns seriously, nor in upholding property standards in the city’s most vulnerable neighbourhoods. 
 
“Do you honestly believe that this is going to help those people? There are a lot of people who don’t have money, but they’re still human beings, and they still deserve a modicum of dignity in their homes,” asked one resident, during the Oct. 22 public consultation. “Are you actually going to address those things, or are you just passing the buck around?” 
 
“The measures that we’re looking at for consumer protection and education of tenants, those are also concrete measures that are going to help,” Riley replied. “I think there is a lot here that will balance these competing perspectives.” 
 
The city’s position is that bylaw enforcement, though it ought to be improved, should be able to take care of negligent landlords – even though hired consultants have advised them that this is not the case and have flagged Vanier, Sandy Hill, and the Ryan Farm area as particularly problematic. The people actually living in those neighbourhoods also say the city’s own 311 system – which staff repeatedly suggested aggrieved tenants call – is largely unable to guarantee property standards are being upheld.
 
“It is a reactive system, where all the onus is on the tenant to make the complaint,” says Margaret Alukker, who lives in Herongate. “Tenants are often kept in the dark on the status of their complaint, and a 311 complaint is not attached to the unit –so if the tenant gets up and moves, the problem remains.”
 
Many of those residents believe that large, corporate landlords, like Timbercreek in Herongate, view 311 as a sort of safety net for residents – a third party that can mediate disagreements between tenants and landlords, but one that is generally reliable for landlords, insofar as it doesn’t really work for tenants.
 
“Timbercreek says to contact 311,” with any complaints, says resident Lisa Brinston. “So we’ll call someone, and it’s like 4 or 5 hours later when they come by. What really gets me is when they do come in, Timbercreek then say ‘we’re dealing with worse right now.’”
 
At the same time, Timbercreek is also being sued in small claims court by several former Herongate residents who allege that the company knowingly let property standards slip as a way to then justify demolition. 
 
In some sense, this round in the fight for landlord licensing was possibly the best shot for housing advocates, since this review was attached to the city’s long-awaited review of the Airbnb question. Airbnb (and similar short-term rental platforms) are little more than the entirely deregulated segment of the rental market.
 
Imposing restrictions on those kinds of rentals is politically more popular at city hall than imposing regulations on landlords who have a large number of low-income tenants. Tying progressive regulations to policy that resonates in the suburbs may have offered activists their best shot at finally winning landlord licensing, purely because one might have assumed the city wouldn’t be able to propose regulation for short-term rentals but not long-term rentals. 
 
Remarkably, that appears to be exactly what the city is doing. While staff insist that they are legally unable to support the regulation of long-term rentals on one hand, they say they are open to the idea of regulating short-term rental housing on the other. 
 
Asked by The Leveller for a legal explanation of how the city is able to consider regulating short-term rentals while simultaneously declaring its inability to regulate long-term rentals, city solicitor David White offered the following circuitous response. “Staff will identify for Committee and Council broad authorities under the Municipal Act, 2001, other than the business licensing authority, that would permit a robust regulatory by-law framework for both residential housing and short term rental accommodations, including for example, Section 10 of the Municipal Act, 2001.”
 
(If you’re able to parse what this means, dear reader, we encourage you to get in touch with us; there may be a position available for a Leveller translator from legal bafflegab to plain english.) 
 
City staff are still finalizing their recommendations to be submitted to council and are expected to release those findings in early November.
 

By Kieran Delamont for the Leveller

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