Balancing Act: The Tenant Defence Fund

By Steve Kupferman

Mayor Ford maintains that his administration can find ways to scale back spending without compromising city services. In this ongoing series, we consider whether these suggestions will help balance the budget, and also balance fiscal restraint with Torontonians’ service needs .

Photo by MRLG from the Torontoist Flickr Pool.

In all the public discussion of Toronto’s operating budget for 2011, there were a few proposed cuts that seemed to hog all the media glory: the TTC bus route service reductions, the possible closure of the Urban Affairs Library. But also on the chopping block is another, less easily understood item, generally given only passing mention in news articles about the City’s finances: the Tenant Defence Fund. Here’s what we were able to find out about it.

WHAT’S THE PROPOSAL?

Cut the City’s Tenant Defence Fund by $100,000, to save money on Toronto’s 2011 operating budget.

HOW WOULD IT AFFECT TORONTO?

To understand how the Tenant Defence Fund affects life in Toronto, we first have to look at the rules that govern rent increases for tenants in Ontario.
Each year the province sets what’s known as a “rent increase guideline.” The guideline is a percentage, tied to the Consumer Price Index, and it’s the maximum amount a residential landlord is allowed to raise a tenant’s rent without seeking special permission. This year’s guideline is 0.7%—the lowest in more than thirty-five years. (Most buildings constructed after 1991 are exempt from the guideline.)
When a landlord wants permission to raise rent by more than the guideline—which can only be done in order to cover renovation expenses, increasing utility costs, or the costs of hiring outside security—he or she has to submit an application to the provincial Landlord and Tenant Board. The application is called an Above Guideline Increase, or AGI.
The Tenant Defence Fund was set up by the City in 1999 primarily to help Toronto renters dispute AGIs. The Fund also provides help for tenants whose landlords want to evict them in order to demolish their apartments or turn them into condos. The original idea was that establishing the Fund would help protect Toronto’s affordable rental housing stock.
The majority of the Fund is paid to the Federation of Metro Tenants’ Associations (FMTA), who use it to provide outreach services and advice to Toronto tenants.
Geordie Dent, executive director of the FMTA, is understandably displeased by proposed cut. Of the $100,000 on the chopping block, $75,000 would come directly out of his organization’s budget.
“We’re going to have to cut service in some way,” he says. “So some people facing this [AGI] application, we’re essentially going to have to pick and choose and let them know that we can’t help them.”
Dent says the FMTA’s programs help about 30,000 people per year.
The Fund also endows a pot of money for grants that the City awards to groups of tenants (not individuals) who need money to fight an AGI, a demolition, or a condo conversion. If the City approves the $100,000 cut, the grant fund would be reduced from $75,000 to $50,000 in 2011.

HOW MUCH WOULD IT COST OR SAVE?

A spokesperson for the City’s Shelter, Support and Housing Administration division tells us that the City spent $446,800 on the FMTA last year, on top of the $75,000 grant fund.
The cut would reduce that expenditure by $100,000 in 2011.

IS IT BALANCED?

It appears to be.
Since the Fund was established in 1999, there have been some changes in the laws that govern the relationship between landlords and tenants. The old Tenant Protection Act of 1997 was superseded by a new piece of provincial legislation called the Residential Tenancies Act of 2006, which came into force in 2007. The Residential Tenancies Act significantly curbs the power of AGIs.
Under the Residential Tenancies Act, above guideline increases are capped at 3% per year, for a maximum of three years. And when rent is increased with an AGI, it goes back down to guideline levels automatically when whatever extraordinary expense the landlord used to justify the AGI no longer applies. So if a landlord gets an AGI to cover renovation costs, the increase is gone after a prescribed period—though that period varies from case to case, and could be longer than a decade.
And so AGIs, the main things the Tenant Defence Fund was created to defend tenants against, are still a concern, but are no longer as formidable as they once were.
The trouble with cutting the Fund is that tenants don’t get the same kind of help from other sources. The province pays for legal aid clinics that help low-income tenants with certain kinds of landlord disputes, but Kenn Hale, director of the provincially funded Advocacy Centre for Tenants Ontario (ACTO), doesn’t think this makes the Fund redundant.
“Provincially funded clinics have some significant constraints on what kind of work they do,” he says. “They’re really focused on low-income people. Since half the people that live in Toronto are tenants, a big chunk of them are not low-income people.”
“I would probably say the majority of tenants in Toronto don’t qualify for [provincial] legal clinic service. It doesn’t mean they’re well off; it just means that the eligibility rules for legal aid are very low.”
The Fund isn’t quite so selective about who it helps. The FMTA’s outreach services and advice are available to all, and grants from the Fund are given to groups of tenants who meet certain not-too-stringent criteria.
Hale doesn’t believe the province would step in to fill a gap in City-funded tenant service.
“I don’t think that’s what’s going to happen,” he says. “I think what’s going to happen is that the people who [the FMTA] was serving are not going to get service. Those proposals for rent increases…are going to go ahead without effective opposition.”
Brad Butt, president of the Greater Toronto Apartment Association, a group that advocates for landlords, says that in his experience provincially funded aid clinics have become involved in many AGI disputes, and that in any case, the Fund has outlived its usefulness.
“The whole idea of the Tenant Defence Fund in 1999 and 2000…was that tenants did not have that empowerment and that therefore the City needed to step in. That’s clearly not the case in 2011,” he says.
“I think the cut that’s being recommended is a fair one in light of how the world has changed over the past ten years.”
Butt is biased, but he has a point. Now that AGIs—the Fund’s main reason for existing—are weaker, it makes sense that City staff, under a directive from the top to cut costs, would choose this particular thing to trim. The amount of money that would be saved is miniscule compared to the City’s total operating budget, and cutting “tenant defence” sounds terrible—but under the circumstances, it appears to be fair. Tenants will still get help dealing with AGIs, just not quite as much as in the past.
Though it should be noted that Dent, the FMTA executive director, does not agree with this assessment.
“I have no idea why it’s being singled out to be cut,” he said recently.
“Mr. Ford has donated to us at our past fundraisers, so we’re essentially baffled as to why this is happening, with no notice, with no forewarning.”
Yes, Ford apparently made a donation.
“He gave us fifty dollars at one of our fundraisers years ago.”
Illustration by Brian McLachlan/Torontoist.

CORRECTION: February 21, 2:01 PM This article originally stated, incorrectly, that AGIs due to capital expenditures are eliminated after construction is complete. In fact, such AGIs go into effect only once construction is complete, and last for period of time prescribed by provincial law in accordance with the project’s “useful life.”