Presents from the public purse:
City gives free advertising to favourite tenant group

by Judi McLeod
December 9, 2002

The City of Toronto’s unholy alliance with an outside, major, political lobby interest group is costing its own taxpayers mega money.

The city has just spent about $50,000 (for mailings alone) to dispatch 76,000 notices to tenants notifying them about tax reductions and resulting rent reductions.

Of the 800-plus municipalities in the Province of Ontario, Toronto was the only one to include the telephone number of an outside political lobby interest group, Federation of Metro Toronto Tenants Associations (FMTA), on their notifications--coincidentally, just in time for the imminent provincial election.

In addition, The FMTA "hotline" funding has been "augmented" (read increased) by Shelter Housing to handle the anticipated extra telephone calls. Not so plain to taxpayers, the city has an indisputable political/financial interest in multi-residential tenants who unwittingly provide a large amount of the city’s revenue through property taxes hidden in their rents. The City of Toronto, in fact, is discriminating against tenants who make up roughly half of Toronto’s population by passing on unequal property taxes; tenants are taxed approximately three more times greater than homeowners.

It seems that The FMTA is in a conflict of interest in this matter because in March 1998 its members publicly came out against tax equity when it was up for a vote (through a motion by former Councillor John Adams) at City Hall. In other words, FMTA takes the city’s position against tax equity and more substantial rent reductions for the tenants for whom they claim to advocate.

Is this why the city chose FMTA to answer tenants’ questions on rent reductions based on property tax reductions?

At the time the FMTA backed the city position, it said that the benefits of tax reductions would go only to the landlords. (see Councillors confronted by great tax divide.) Never mind that the current 77,000 taxpayer-paid notices advertising their telephone number proves otherwise.

FMTA -- to the exclusion of all other tenant advocacy groups in Toronto, currently receives more than $375,000 annually from the city, its principal source of funding.

At the same time tenants are receiving their notices, there is a second review of the Tenant Defence Fund underway. The first one took place two years ago, but by the same "outside" company as before, MCC Workplace Solutions. Paul York, former FMTA board member says that MCC’s review was little more than a whitewash for the Housing Division. It was "a case of CYA" (cover your ass), he said.

Courtesy of councillors largely dependent on the highrise vote such as Coun. Michael Walker, and amid cries of foul from other tenant advocacy groups, the FMTA has become more powerful than ever. Their website also paid for from the public purse, keeps councillors in line in election years.

If there was ever a right time to expose the alliance between the city and FMTA, it’s now before the city’s budget deliberations swing into high gear.

Seventy-seven thousand tenant households received official rent decrease notification.

Nearly 77,000 tenant households (76,700 to be exact) across Toronto have received notices that their rents are being automatically reduced due to a decrease in municipal property taxes of 2.49 percent or more. Tenants living in buildings with a tax decrease of less than 2.49 percent will not be notified of the imminent decrease. In those cases, the rent decrease is not automatic; it must be applied for at the Ontario Rental Housing Tribunal. The rent reductions come into effect Dec. 31. 2002, which in practical terms means Jan. 1, 2003.

The notice of rent reduction, issued by the City of Toronto, reflects 20 percent or one fifth of a property tax reduction, as per Section 136 of the Tenant Protection Act (see Property tax reductions are the result of a recent provincial property tax assessment. In layman’s language, property taxes increased for most buildings (something the city and the FMTA never do discuss, only the decreases,) and decreased for others. Not all rental properties received tax decreases, but for those that did the landlords are required by Ontario law to reduce rents.

For example, at 310 Niska Rd., tenants received notification of a 1.7 percent rent reduction, or one fifth of the property tax reduction for that building. At the same time, their landlord has applied to the Ontario Rental Tribunal to increase their rents 10 percent. Understandably, many tenants are confused by the prospect of rents going up at the same time they are supposed to go down. It could be said that 2002 has been a difficult year for Toronto tenants!

Landlords might pocket the rent reduction if the unit is turned over under vacancy decontrol, a good argument for rent controls, and this rent reduction does nothing to stop the landlord taking future guideline and above-guideline increases on the unit. But theoretically the reduction will benefit all "sitting tenants," tenants whose rents are rent-controlled through the Tenant Protection Act, by sheer virtue of their physically being in the apartment.

In below-market tenancies, the landlords will continue to apply guideline and above-guideline increases until the rents reach market rates. Where tenancies have reached market rates, landlords are already offering rent discounts to retain the tenants. The rent reduction would apply to the legal rent, not to the discounted rent; in those cases landlords will adjust the rents accordingly to comply with the shifting market, especially since vacancy rates are expected to continue to rise (estimated over four percent by this time next year). This, however, remains to be seen.

Interesting to note that the city also chose to send the notices to units with fewer than six units, although it was not required to do so by Section 136. This was likely to the consternation of small landlords. House rents are typically closer to market than apartment rents because rent controls are not registered with the state and cannot be enforced.

The process for tenants to apply to the Ontario Rental Tribunal is costly and complex. Tenants must fork over $45 for the first application and $5 for each additional application to the Tribunal. Only those that apply will benefit, with most not bothering to apply. There has been pressure on the provincial government to reform existing legislation to make all tax reductions, no matter how small, automatic rent reductions. Thus far, the province has not heeded that pressure.

Meanwhile, every call coming into the FMTA during the three-month period earmarked to take tenant calls sparked by the notices will be put into a database that could later be used for political/membership purposes by the highly political FMTA.

Providing free advertising for an outside lobby group in an election year is one thing, but not a single local councillor seems to have considered the conflict of interest inherent in this possibility for all city tenants.

Go back to the Federation of Metro Tenants Associations Story