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HomeMy WebLinkAboutDSD-2023-486 - Rental Housing, Eviction and Displacement Study Development Services Department www.kitchener.ca REPORT TO: Community and Infrastructure Services Committee DATE OF MEETING: December 4, 2023 SUBMITTED BY: Rosa Bustamante, Director of Planning, 519-741-2200 ext. 7319 PREPARED BY: Natalie Goss, Manager, Policy & Research, 519-741-2200 ext. 7648 Garett Stevenson, Manager, Development Review, ext. 7070 Richard Kelly-Ruetz, Senior Planner, 519-741-2200 ext. 7110 WARD(S) INVOLVED: All Wards DATE OF REPORT: November 15, 2023 REPORT NO.: DSD-2023-486 SUBJECT: Rental Housing, Eviction and Displacement Study RECOMMENDATION: That staff be directed to engage the development industry and community stakeholders on a rental replacement by-law as outlined in Option 3 of report DSD- 2023-486; and, That staff continue to work with community stakeholders to explore additional tools that may be to support the transitioning of displaced residents; and further, That staff continue to collaborate with the Region of Waterloo on shared solutions related to rental housing, eviction, and displacement. REPORT HIGHLIGHTS: The purpose of this report is to provide an update to Council on housing, eviction and displacement study. In the area of eviction and displacement there is currently one legislative tool available to Kitchener as a municipality: a rental replacement by-law. This tool only applies to displacements where a rental property with 6 or more units is demolished. This report outlines considerations of a rental replacement by-law including the effectiveness of the tool in addressing displacement and the financial considerations and impacts of this type of bylaw on the development feasibility of existing rental properties with 6 or more units. Despite the financial considerations for future development, staff recommends moving forward with a rental replacement by-law to maximize protection of existing tenants. Eviction and displacement are complex matters. Staff continues to have conversations with the Region of Waterloo and community stakeholders about the tools that are available to municipalities and all opportunities to partner with other orders of government and community stakeholders to address housing challenges. *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. There are no financial implications of this report. This report supportsA Caring Communityby directing staff to continue exploring tools and resources to support tenants in Kitchener. EXECUTIVE SUMMARY On January 30, 2023, Council passed a resolution addressing rental housing and displacement, directing staff to provide recommendations and review the rental replacement by-law tool under the Municipal Act. The report provides an update on the resulting Rental Housing, Eviction, and Displacement Study, focusing on a potential rental replacement by- law. of a rental replacement by-law in Kitchener. financial feasibility analysis assesses the potential impacts of a rental replacement by-law on residential development in Kitchener. Findings suggest an impact on the development feasibility of existing rental properties. Options for the parameters of a potential rental replacement by-law in Kitchener are outlined. Going forward, staff recommend engaging with community stakeholders and the development industry on a consistent City- wide approach which maximizes the protection of existing tenants. Recent changes to provincial legislation, particularly through Bill 97, grant the province the authority to prescribe additional regulations for rental replacement by-laws. The staff recommendation is for Council to direct the preparation of a rental replacement by-law, and continue engagement with the Region and community stakeholders to explore additional tools supporting displaced residents. BACKGROUND: On January 30, 2023, Council passed a resolution related to rental housing and displacement in Kitchener. At that time, Council directed that staff provide recommendations on how the City can support the transitioning of displaced residents; that staff review rental replacement by-laws in Ontario and assess its applicability in Kitchener; that staff work with community stakeholders to explore tools, and; that the resolution be circulated to the Region, local municipalities, and to the Association of Ontario Municipalities (AMO). Council requested staff to report back by the end of 2023. Since that time, staff initiated the ongoing Rental Housing, Eviction and Displacement Study. The purpose of this report is to update Council on this study and seek direction for next steps. This report is an important starting point of an ongoing conversation with Council regarding the specifics of available tools at the municipal level to support existing tenants. This report focuses on a rental replacement by-law as one tool that may be implemented in short order. tools regarding eviction and displacement, it is not intended to provide a comprehensive list. Staff continue to learn and engage with community partners to gain a better understanding of this matter and will report back to Council further throughout 2024. Figure 1 depicts the recent and upcoming updates to Council for housing related studies and initiatives with this report highlighted in red below. Figure 1: City of Kitchener Housing related studies and initiatives REPORT: The purpose of this report is to provide January 2023 as well as respond to the action item housing strategy. This report primarily focuses on legislative tools regarding rental replacement and its potential applicability to Kitchener, with a secondary focus on other rental tools and initiatives to be further explored in a future report. Evictions & Displacement The Residential Tenancies Act, 2006, is the Provincial legislation which governs rental housing in Ontario, including matters related to evictions. Generally, when a tenant is evicted from their unit, they must be provided with an N12 or N13 notice from the landlord which . These notices are filed with the Landlord and Tenant Board (LTB). The LTB enforces the Residential Tenancies Act. The City obtained eviction data from the Landlord and Tenant Board for N12 and N13 forms that have been filed in Kitchener. Figure 2 explains the two notice types and Table 1 includes statistics from 2017-present on the number of these notices processed by the LTB. A notice provided to the tenant to end their tenancy because the landlord, a purchaser or a family N12 member requires the rental unit A notice provided to the tenant to end their tenancy because the landlord wants to demolish the rental N13 unit, repair it, or convert it to another use Figure 2: Explanation of N12 and N13 Notices Table 1: N12 and N13 notices filed to the Landlord and Tenant Board (LTB) Year N12 N13 2017 134 15 2018 32 10 2019 67 21 2020 49 7 2021 76 17 2022 132 28 Jan Jul 2023 101 47 It is acknowledged that evictions may also occur informally and without proper notice, and thus would not be captured by the statistics above. Staff continues to work with community stakeholders to understand the depth of evictions and have also recently made available an better understand the local context. Municipal Tools & Eviction Under the current Provincial legislative framework, the only legislative tool at the municipal level to directly regulate evictions is through a rental replacement bylaw passed under the Municipal Act. Evictions must comply with the Residential Tenancies Act, and disputes are settled by the Landlord and Tenant Board (LTB), which enforces the Act. Figure 3 outlines of the legislative framework in Ontario. Eviction via demolition Eviction via demolition Eviction via of rental properties or of rental properties / renovations of an buildings with less buildings with 6+ unitsexisting building than 6 units No municipal tools Rental replacement by-No municipal tools available. Evictions law is available to available. Evictions must comply with the must comply with the municipalies. Residential Tenancies Residential Tenancies Act.Act. Figure 3: Jurisdiction for municipalities and evictions Staff continues to build an understanding of the complexities of eviction and displacement. Throughout 2023, staff has continued to engage with community and government partners on matters related to rental housing including through discussions with the Region of Waterloo, with the Lived Expertise Working Group (LEWG), and with community stakeholders. To provide further resources, staff has updated the corporate webpage in fall 2023 with: A new webpage on the City of Kitchener website to provide resources and information to renters in Kitchener about their rights as a tenant. The webpage also links to external sources with additional information (i.e. Region of Waterloo resources). - tenants can fill in details where they have been evicted. Additionally, in June 2023 Council added a permanent dedicated staff resource in the Planning Division to lead and assist with policy related housing matters. Rental Replacement By-laws As outlined above, there is only one tool available to municipalities regarding displacement and eviction a rental replacement by-law. Under Section 99.1 of the Municipal Act, 2001, municipalities may enact bylaws to prohibit and regulate the demolition or conversion of multi-unit residential rental properties of six or more units. There are three municipalities in Ontario which are known to have enacted a rental replacement by-law: Toronto (2006), Mississauga (2018), and Oakville (2023). A rental replacement by-law can ONLY be applied to properties with 6 or more rental units which are proposed for demolition or conversion. The Municipal Act currently contains flexibility on parameters a municipality can include within a rental replacement by-law; the main one being limiting applicability to properties with 6 or more rental units. Typical parameters included in the Toronto, Mississauga, and Oakville by-laws are: Applies to properties with 6 or more rental units proposed to be demolished; The replacement units must be comparable in size, quality, and rent price to the original unit; and, The replacement unit must be retained as rental unit for 10 to 20 years. Financial Feasibility Analysis Rental Replacement By-law in Kitchener complete a feasibility assessment of a rental replacement by-law in Kitchener including assessing the financial impacts on residential development. Parcel is a land economics firm Enabling Missing Middle and Affordable Housing Feasibility Study endorsed by Council on May 8, 2023. rental replacement report includes background information including the policy context in Ontario for rental replacement by-laws, an overview of the rental housing market in Kitchener, a financial feasibility analysis of impacts of a rental replacement by-law, conclusions, and appendices with their detailed assumptions which informed their analysis. Rental Replacement By-law, Financial Feasibility Study) is included as Attachment A. This report will focus on summarizing the key findings from the financial feasibility analysis -law in Kitchener. feasibility analysis focused on two key questions: 1. Will a new rental replacement by-law risk materially impact residential development in Kitchener? 2. If a rental replacement by-law is pursued in Kitchener, what are the optimum parameters to balance the need to accommodate new growth while encouraging the maintenance (or expansion) of local purpose-built rental inventory? Methodology Feasibility Study, Parcel undertook financial analysis for 3 development typologies in condo and rental tenures to assess financial impacts of a rental replacement by-law. To account for different land values across the city, the typologies were assessed in a central and suburban context, as further outlined in Figure 4. Central and Suburban Analysed in Central & geographies in Kitchener Suburban Areas Analysed in Central & Analysed in Central Areas Suburban Areas Only Figure 4: Graphic of the geographies and 3 development typologies analysed by Parcel report assessed building while maintaining typical development return metrics (i.e., profitability). In other words, finding the point at which a development is no longer profitable when existing rental units must be replaced. The findings of this analysis will help inform staff, Council, and developers of the potential impacts of a rental replacement by-law on the future supply of new housing units. There are 21,400 primary rental units in Kitchener (i.e. purpose built rentals). Of these, 20,500 (96%) would be eligible for rental replacement (6+ units). Of these only 17% / 3,600 of them have redevelopment potential (~215 buildings). Findings Question 1 (Impacts of a Rental Replacement By-law on Development) Parcel found that a rental replacement by-law is likely to be a deterrent to intensification of existing rental properties with 6 or more units across the city. Among the development typologies tested in central and suburban areas, only the central High-Rise Condo (45- storeys) demonstrated return metrics that are consistent with those a developer may consider pursuing. Parcel found that existing rental buildings with more than 50 units are highly unlikely to be redeveloped, whether a rental replacement by-law is in place or not. Findings Question 2 (Optimum Parameters for a Rental Replacement By-law) In light of findings from question 1, should the City pursue a rental replacement by-law, Parcel recommended the following parameters: -wide that treats all areas the same and would provide clarity and certainty for developers; A replacement by-law would apply only where 6 or more rental units are proposed to be demolished, and only where the existing rents are at or below the Average Market Rent (AMR); Replacement units should be similar in mix, size, and quality as the original units; The replacement units must remain rental for 10 years, or until the tenant moves out; Cash-in-lieu payments and off-site units should be permitted; Rental replacement should not apply when the vacancy rate is above 3%; and, The by-law should be phased in (i.e., by geography, or by incremental introduction of requirements). Options & Recommendation Rental Replacement By-law in Kitchener In consideration of the Rental Replacement Financial Feasibility Study, and ongoing conversations with the Region of Waterloo and community stakeholders about eviction and displacement, staff have outlined 3 options available to Council. These options are: Option 1 Do Nothing Do not pursue a rental replacement by-law. Rental properties / buildings with 6 or more units proposed for demolition will continue to be addressed on a case-by-case basis, primarily between the proponent (developer/landlord) and the existing tenants in accordance with the Residential Tenancies Act. Any risk to the ability or willingness of developers to deliver housing supply on properties with 6 or more rental units is avoided. Option 2 Develop a Rental Replacement By-law (consultant recommendations) Direct staff to undertake further engagement on a rental replacement by-law and return to Council in Q1 2024 with a rental replacement by-law for consideration. The by-law will include parameters generally he starting parameters for engagement on a rental replacement by-law would include: A to rental replacement, where all geographies (i.e., central and suburban) and typologies (i.e. mid and high rise) are treated the same; An option to provide units off-site (instead of in the new building); Replacement units must remain rental for at least 10 years, or until the tenant moves out; An option to provide will include cash-in-lieu of replacement units; and, --law requirements. Option 3 Develop a Rental Replacement Bylaw (different parameters) This option is the same as Option 2, with differing parameters to maximize protection of existing tenants as follows: No ability for developers to provide cash-in-lieu of replacement units. Replacement units would be required to be offered to tenants on-site, or at a similar site (off-site) nearby; and, A rental replacement by-law would immediately take full effect (no phasing in). Table 2: Summary of Options Rental Replacement By-law Option 1 Option 2 Option 3 Pursue a rental replacement by-law Parameters of By-law Same approach City-wide Replacement units provided on-site OR off-site n/a Replacement units must remain rental for 10 years Cash-in-lieu of providing replacement units Phasing-in of by-law requirements Staff Recommendation Option 3 Staff recommend pursuing the development of a rental replacement by-law as outlined in Option 3. This would maximize protections of existing tenants using an existing tool available under the Municipal Act, without adding significant administrative responsibilities to the City of Kitchener. This approach is consistent with Council guidance in January 2023 and the actions outlined in priority 6 of Housing for All. It is worth nothing that Option 3 may have impacts on the long-term development potential of properties with 6 or more rental units, which could impact housing supply over the longer-term. Staff see the risk as low given the relatively small overall number of properties with rental units which would be likely to be redeveloped. Parcel notes that approximately 17% (3,600) of all existing rental units in Kitchener are a candidate for redevelopment (properties which contain 6-30 rental units). This represents around 215 buildings. Should Council proceed with a rental replacement by- Option 3 leverages the authority of the Municipal Act to apply a rental replacement by-law and offers the strongest protection for tenants. It is the opinion of staff that these protections outweigh the potential risks outlined above. Further, the parameters proposed through Option 3 replacement City-wide would offer predictability and guidance to the development community while perhaps shifting redevelopment opportunities away from properties with 6 or more rental units. Recent Changes to Provincial Legislation Rental Replacement By-laws As part of Bill 97, the province amended the Municipal Act to provide the Minister of Municipal Affairs and Housing (MMAH) with the authority to prescribe additional regulations for a rental replacement by-law. Bill 97 received Royal Assent in June and as such, the province can now prescribe changes to municipal authority for rental replacement which could impact the parameters of a potential by-law in Kitchener. The province sought feedback on which potential regulations that would apply to municipalities that pass rental replacement by-laws and no additional changes have been proposed to-date. A Provincial webpage feedback received to inform the development of future regulations, if any, under this new At this time no additional regulations have been included in the Municipal Act on rental replacement by-laws. Recent Changes to Provincial Legislation Residential Tenancies Act Earlier this year, the Province tabled Bill 97 (Helping Homebuyers, Protecting Tenants Act) and it received Royal Assent on June 8, 2023. Changes to the Residential Tenancies Act were passed regarding evictions. When evicting a tenant to renovate a unit, landlords would be required to: Provide a report from a qualified person stating the unit must be vacant for renovations to take place. The report must state that the repairs or renovations are so extensive that they require the vacant possession. Update the tenant on the status of the renovation in writing (if they plan to return) Give them a 60-day grace period to move back in, once the renovations are complete. e rent, the tenant would have two years after moving out, or six months after renovations are complete (whichever is longer), to apply to the Landlord and Tenant Board for a remedy. Increase the maximum fines from $50,000 to $100,000 in the case of a person other than a corporation and from $250,000 to $500,000 in the case of a corporation. Bill 97 received Royal Assent on June 8, 2023, but has not yet come into force as a proclamation has not been issued by the Lieutenant Governor. Region of Waterloo Plan to End Chronic Homelessness In early November Regional staff provided an update to Regional Council on the Region of Plan to End Chronic Homelessness project. The purpose of this work is to provide During a November staff report one of the directions requested by Regional Council was: Direct \[Region\] staff to work with community to develop a suite of policy incentives supporting the creation of new affordable housing and/or for preventing the loss of existing affordable housing stock and tenant displacement in Waterloo Region and bring forward any further recommendations to Regional Council for consideration and approval. implement housing programming and policy that prevents displacement and the loss of taff will continue to collaborate with Region of Waterloo staff on the implementation of the Plan to End Chronic Homelessness work, particularly as it relates to maintaining rental housing stock and preventing tenant displacement. In summary, it is recommended that Council direct staff to prepare a rental replacement by-law as outlined in this report and that staff continue to work with the Region of Waterloo and community stakeholders to explore additional tools that may . Should Council wish to advocate to other orders of government on matters related to eviction are currently no legislative tools for municipalities to pass by-laws in this area. Since 2020, Council has passed several resolutions or actions related to housing and affordability, including the following: On October 5, 2020, Council requested that the Province reinstate the Planning Act provisions enabling a municipality to apply Inclusionary Zoning provisions within its entire jurisdiction, or at minimum, enable Inclusionary Zoning along Major Transit bus routes throughout the City, rather than only in Major Transit Station Areas (MTSAs). On October 18, 2021, Council passed a resolution to take additional and meaningful steps to address the ever be sent to the Association of Municipalities of Ontario, the Premier of Ontario, the Ministry of Municipal Affairs and housing, the Region of Waterloo and other Municipalities in Ontario for their consideration and possible endorsement. On September 25, 2023, Council called on the Provincial Government to double current social assistance rates for ODSP and OW recipients to reflect the cost of living and to tie these new rates to inflation so that people can afford to live a dignified life in the Province of Ontario. On September 25, 2023 Council called on the Provincial Government to support Feed recipients their first $1000 earned without penalty and to exempt benefits such as CPP, WSIB, EI and the upcoming CDB from clawbacks as well. On October 16, 2023, Council directed staff to propose a zoning by-law amendment that would permit "as -of -right" permissions for up to four (4) residential units on a property wherever zoning permits single detached, semi-detached or street townhouse dwelling units on sufficient lot sizes and report back to Council in Q1 2024. STRATEGIC PLAN ALIGNMENT: This report supports A Caring Community by directing staff to continue exploring tools and resources to support tenants in Kitchener. FINANCIAL IMPLICATIONS: Capital Budget The recommendation has no impact on the Capital Budget. Operating Budget The recommendation has no impact on the Operating Budget. COMMUNITY ENGAGEMENT: INFORM the council / committee meeting. PREVIOUS REPORTS/AUTHORITIES: DSD-20-214 Housing for All City of Kitchener Housing Strategy COR-2022-104Housing for All Program Update 2022 Year in Review DSD-2023-160 Enabling Missing Middle and Affordable Housing DSD-2023-295 Housing for All Strategic Lived Expertise Working Group First Year Review and Rental Housing, Eviction and Displacement Study Update DSD-2023-446 City-wide Lodging House Review Municipal Act, 2001 Planning Act APPROVED BY: Justin Readman, General Manager, Development Services Department ATTACHMENTS: Attachment A Rental Replacement By-law Financial Feasibility Study, Parcel Sfoubm!Sfqmbdfnfou!Cz.mbx! Gjobodjbm!Gfbtjcjmjuz!Tuvez! Opwfncfs!33-!3134! Qbsdfm! 2! QSFQBSFE!GPS;! Uif!Dpsqpsbujpo!pg!uif!Djuz!pg!Ljudifofs! 311!Ljoh!Tusffu!Xftu-!Ljudifofs-!Poubsjp-!O3H!5W7! QSFQBSFE!CZ;! Qbsdfm!Fdpopnjdt!Jod/! 361!Vojwfstjuz!Bwfovf-!$332-!Upspoup-!Poubsjp-!N6I!4F6! jogpAqbsdfmfdpopnjdt/dpn! 527.97:.9375 Opwfncfs!33-!3134! 3134.1146! 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