3. Background

In discussions with the City starting in late 2010, the OHRC raised a number of concerns about whether the bylaw was targeted at, or would have a negative impact on, people protected by the Code. Although the City made some changes, when it passed the bylaw, some concerns remained unaddressed. The OHRC decided to inquire further.

3.1 An overview of Waterloo’s Residential Rental Housing Licensing By-law

The City of Waterloo’s rental housing licensing bylaw was passed in May 2011 and came into effect on April 1, 2012.

The licensing bylaw regulates:

• Non-owner-occupied rentals with up to 4 bedrooms (Class “A”)
• Owner-occupied units with up to 4 bedrooms for rent (Class “B”)
• Lodging houses (rental units with 5 or more bedrooms – Class “C”).

Requirements for Class “A”, “B” and “C” licences are:

	Bedroom limit	Per-person floor area requirement in bedrooms	Gross floor area requirement	Other requirements (not all are specified here)
Class “A”	Up to 4	7 square metres	No more than 40% bedrooms
Class “B”	Up to 4 for rent	7 square metres	No more than 50% bedrooms
Class “C”	5 or more	7 square metres	N/A	The building cannot: be more than 600 square metres be more than 3 storeys have more than 2 bathrooms have more than 1 kitchen. All bedrooms must have doors capable of being locked. The owner must have written lease agreements with all tenants over age 16.

Unless renewed, a licence will expire “on the 31^st day of March next following the issuance or renewal of the licence.”^[1]

The bylaw establishes limited exemptions to the four-bedroom limit and the gross floor area requirements for Class “A” and “B” properties:

• Owners of rental housing properties that, as of April 1, 2012, already had written leases with five occupants were eligible until June 30, 2012 to apply for a Class “A” licence for a 5-bedroom property (or for a Class “B” licence for an owner-occupied property with five rented bedrooms). The provision granting such exemptions “expire[d] and be[came] of no force or effect after December 31, 2012.”^[2]
• Rental housing properties in which bedrooms exceed the gross floor area requirements but are in compliance with federal or provincial legislation and regulations, and with all City bylaws, were eligible until June 30, 2012 to apply for a Class “A” licence (or a Class “B” licence if the property is owner-occupied), but the exemption will become void if the property’s gross floor area for bedrooms increases, or if the licence expires.^[3]

The licensing bylaw also regulates

• Recognized lodging houses (Class “D”)
• Temporary rental units (Class “E”).

Requirements are:

• Rental housing properties that were licensed as lodging houses under the City’s old lodging house bylaw may be grandparented as Class “D” units (and do not have to meet the Class “C” requirements described above), but the number of bedrooms cannot exceed the number of persons permitted under the old licence, and ”[o]nce a Class “D” licence has expired, no person may thereafter apply for, or otherwise renew, a Class “D” licence in respect of the Rental Unit.”^[4]
• Applications for Class “D” (grandparented) licences had to be submitted by June 30, 2012.
• Non-renewable temporary Class “E” licences may be granted for up to 36 months, at the City’s discretion.

To get an initial licence, landlords must pay the City a “preliminary consultations” fee of $68.15 and a licensing fee ranging from $374.82 to $757.30 (depending on unit type). After that, they must renew the licence annually (renewals cost less than initial applications).

According to the bylaw, the City may ask for a number of items on a yearly basis, including:

• A list of tenant names and contact information
• Proof of insurance
• Heating, ventilation and air conditioning “HVAC” inspection certificate
• Confirmation that the unit complies with the Building Code Act (and regulations under it, including the Building Code), the Fire Code Protection and Prevention Act (and regulations under it, including the Fire Code), and the Electricity Act (and regulations under it, including the Electrical Safety Code)

According to the bylaw, the City may ask for certain items at the time of first application and every five years after that, including:

• Police clearance certificate for the owner/applicant
• Electrical Safety Authority “ESA” inspection certificate
• Floorplans
• Plans for maintaining the property, parking and garbage disposal.

Landlords who fail to abide by the bylaw can have their licences revoked or suspended, and/or face fines of up to $25,000 for a first offence (for an individual) or up to $50,000 for a first offence (for a corporation). Fines increase for subsequent offences.

The bylaw stipulates that the Director of By-Law Enforcement, before revoking or suspending a license, shall consider:

(a)   the impact of any such licence revocation or suspension on any Tenants; and

(b)   imposing terms or conditions on any such licence revocation or suspension that would minimize the adverse impact on any Tenants, including the possibility of providing a reasonable time period before the licence revocation or suspension takes place to permit Tenants to find new housing or to seek relief in a Court or before the Ontario Landlord and Tenant Board.^[5]

3.2 An overview of related zoning bylaw provisions

All rental properties (classes “A” through “E”) that house more than three renters are defined as “lodging houses” in the City’s zoning bylaws:

“Lodging House” [means] a building, or portion thereof, designed or used for residential occupancy where a proprietor offers lodging units for hire or gain directly or indirectly to more than three other persons with or without meals. A lodging house shall not include a hotel, motel, bed and breakfast, nursing home, group home, institutional or other similar use that is licensed, approved or supervised under any general or special Act.

“Lodging House [–] Class One” [means] a lodging house which is located in the whole of a building and:

(i)  occupied by four or more persons in addition to the proprietor and his/her household; or

(ii)   occupied by 6 or more persons without a proprietor and his/her household.

“Lodging House [–] Class Two” [means] a lodging house [located] within a dwelling unit occupied by 4 or 5 persons without a proprietor and his/her household.^[6]

Lodging House Class One properties are included on the list of acceptable uses in certain medium and higher density zones in the City. These properties are subject to approval by a site plan review committee.

Lodging House Class Two properties are permitted in a number of lower-density zones, but certain minimum separation distances apply to them. For example, a Lodging House Class Two must be located at least 150m from any other Class Two properties in certain lower-density zones, and must be located at least 75m from any other Lodging House Class Two in certain medium density zones.  For more information on this point, see the section on minimum separation distances, in section 4.2 of this report.

The City has developed a community improvement plan and passed an official plan amendment and zoning bylaw amendment affecting housing in the Northdale neighbourhood, immediately adjacent to both the University of Waterloo and Wilfred Laurier University. This initiative will likely affect the types of housing available in the area. While this initiative has been adopted by Waterloo City Council, it is not yet in force because appeals have been made to the Ontario Municipal Board. The Northdale initiative was not the focus of the OHRC’s inquiry; the OHRC did not assess the interaction of the initiative with residential rental housing licensing, nor did it seek information about how the initiative might affect tenants in Northdale.

3.3 Impetus for the bylaw

Since 1986, Waterloo has done many studies into regulating rental housing. There have also been several related legal cases and legislative changes:

• In 1986, the City instituted a lodging house bylaw following a recommendation by a coroner’s inquest into the fire-related death of a student. The bylaw was amended in 2000. Under the amended bylaw:
  • Landlords renting to four or more lodgers had to be licensed, and were subject to regular fire inspections
  • Landlords renting to a group of people who made up a “residential unit” (characterized, among other things, as a “single housekeeping unit”) did not need to be licensed.^[7]
• In 2003, the Ontario Superior Court of Justice found that multiple units in an older building which were leased to students met the “residential unit” exemption of Waterloo’s lodging house bylaw. When determining if the exemption applied, the Court considered whether the premises constituted a “single housekeeping unit.” The Court held that the distinguishing characteristic was whether there was individual or collective decision making with respect to the control of the premises. This decision was affirmed by the Ontario Court of Appeal.^[8]
• In 2004, the City launched a Student Accommodation Study, and in the following years it embarked on several studies to examine alternative regulatory programs for lodging houses, and also for smaller-capacity rental houses.
• On January 1, 2007, the Municipal Act was amended to allow licensing of “residential unit” rental properties.
• In a 2010 report, City staff expressed concerns that rental unit owners were dismissive about fire prevention directives.^[9]
• In a 2011 report, City staff stated:

Based on the current Lodging House By-law, many of the 4,300 currently unlicensed properties may not require a licence. This is a result of court decisions narrowing the scope of the by-law to a degree that renders the current legislation very ineffective in dealing with the issues that are of concern city wide.^[10]

In 2010, the City announced that it would conduct a “Rental Housing Licensing” review. It used its new powers under the Municipal Act to initiate a licensing regime for low-rise rental units when it passed the rental housing licensing bylaw in 2011.

The bylaw states that the City’s purpose in regulating rental housing is to

1. Protect the health, safety and human rights of renters,
2. Ensure that certain essentials such as plumbing, heating and water are provided to renters, and
3. Protect the residential amenity, character and stability of residential areas.^[11]

Health and safety

Health and safety considerations appear to have been a significant driving force behind creating the bylaw. City staff explained frustrations with the previous system, in a 2010 report:

One major challenge that Fire Prevention [who administered the bylaw along with Zoning and Building divisions] faces is the dismissive behaviour of owners towards the direction given to them. Often, they continue to operate and claim [the] house is not “Lodging” but rather a single house-keeping unit^[12]

On the new bylaw’s approach to fire safety, the City said:

…the new licensing regime continues to have regular fire inspections. Instead of scheduled annual or bi-annual inspections of every unit, the City now conducts risk-based and random inspections. Based on an extensive consideration of the issue, including input from trained fire professionals, the City believes that this change will both improve fire safety and be more cost-effective (thus, keeping licencing fees lower, which, in turn, may keep rent lower).^[13]

Residents of Waterloo raised other health and safety concerns about rental housing, including mold, poor ventilation and insufficient heat.^[14]

According to the City, less than six months after the bylaw had been implemented, “dozens of Building Code deficiencies and violations [had] been identified by the City” and “more than 80 percent of the electrical inspections required by the by-law [had] identified defects.”^[15]

The OHRC has consistently acknowledged the validity of health and safety rationales for licensing. Some of the new licensing bylaw requirements – such as compliance with the existing health and safety standards set out in the Fire Code, the Building Code and the Electrical Safety Code – appear related to the City’s stated goal of resident safety.

If other aspects of the bylaw that go beyond the Building Code and Fire Code – such as the bylaw’s per-person and gross floor area requirements – are meant to meet genuine health and safety (or planning) rationales, it is not clear why the City has exempted apartment buildings.

The City has commented that:

…there are good reasons to be particularly concerned about the standards of rental housing that do not apply as directly or forcefully to exclusively owner-occupied units. Renters are much more at the mercy of their landlords and generally have less ability to physically upgrade their premises than a homeowner. Landlords have a profit-driven incentive to minimize cost, which may impact on tenant health and safety if unchecked by licensing standards. The Building Code and the Fire Code also reflect that it is appropriate to impose requirements on lodging houses that are not required of other housing types. While there is an obvious functional overlap, operating a rental housing business is not identical in every fashion to operating an owner-occupied residence, and the City’s by-laws (and provincial legislation) reflect this.^[16]

If any of the bylaw requirements are discriminatory, the City must not simply show that it had “good reasons” for the requirement, but must show that it meets a vital need in a way that no alternative measure could. It is a very high standard.

Other factors

In addition to health and safety, the bylaw may be responsive to certain complaints received by the City. Documents disclosed by the City showed
that there were significant numbers of complaints about the character of neighbourhoods, properties not being maintained by landlords, and the behaviour of some residents (including students). For example, there were:

• Many complaints related to run-down properties. These included concerns about uncut grass, weeds, unshoveled sidewalks, untrimmed bushes, debris on lawns and porches, and garbage left out after the pick-up day and left to sit for days or weeks.
• Several complaints about poor maintenance and repairs to the interior of rental properties.  These included concerns about failure to clean carpets after sewage backup, broken doors, locks, windows and bathroom tiles.
• Several tenant behaviour-related complaints, particularly about noise (from people in the street, children, late-night parties and tenants’ pets); broken bottles on sidewalks, streets, rental properties or neighbouring owner-occupied properties; and parking on grass.^[17]

City documents show there was a much higher proportion of by-law enforcement complaints against rentals than non-rentals.^[18] The City received a number of complaints from the public about ineffective enforcement of the noise, parking and property maintenance bylaws, and/or the need for more staff to enforce bylaws.^[19]

Where the City has imposed requirements – such as plans for parking and property maintenance – in an effort to address valid planning concerns and in a way that does not disproportionately affect Code-protected groups, then those requirements are appropriate. 

However, some people expressed their concern that the bylaw had yet another motivation: to limit housing for certain vulnerable groups.

One tenant surveyed who receives Ontario Works benefits said of the City, “they don’t want poor people here any more.”

While at least one student organization appears to have supported the bylaw^[20] and some students raised concerns about rental housing and the need for more monitoring,^[21] other students criticized the bylaw, directly to the City and also in the media,^[22] and raised concerns about its impact on students.

One student surveyed said: “This bylaw will force students into massive student apartment complexes.”

One parent wrote to the City expressing concern that:

 [The] by-law can regulate someone’s freedom to a private and quiet right to live in a town of their choice near the University of their choice. I am also very upset and disappointed with this regulation as I truly agree that this is a serious infringement on our basic human rights and impacts to our freedom of choice of where to live.^[23]

There certainly were concerns about student housing in the community. Some residents shared concerns with the City about how what they viewed as “family” neighbourhoods were becoming “student” neighbourhoods.^[24]

City documents from 2002 and 2003 show a policy of encouraging development of high-density apartment housing in nodes and corridors near universities. While one of the stated goals is to increase student housing near universities in response to student preference, another is to “draw students out of existing singles, thereby increasing the numbers of singles available for non-student households...”^[25] Another document stated in 2004 that the goal of the City’s land use plan was “to encourage more student housing in areas of high intensity near the Universities and discourage the conversion of low density housing to student rental housing in areas of low intensity.”^[26]

The City states that its bylaw had no intent to target students:

The statistical reality is that a large proportion of rental housing in Waterloo constitutes student housing. Accordingly, students are directly affected by the Rental Housing Licensing By-law, and it would be irresponsible for the City not to take this into account. To suggest that the City actively treats students or young people differently than other persons, however, is simply incorrect. The by-law specifically excludes student residences operated by a college or university. The by-law does not apply to apartment buildings, even though apartment buildings constitute, by a very wide margin, the most common type of new construction designed for student housing.^[27]

The City states that:

[It] understands its duty not to discriminate against Code-protected groups. Indeed, as a municipality, it is obligated not to pass by-laws that improperly discriminate against any person, Code-protected or not. It complies scrupulously with this obligation.^[28]

The OHRC acknowledges that some City documents clearly reflect this understanding. The City included language in the bylaw referencing the Human Rights Code, and representatives of the City have publicly indicated that the bylaw cannot target students.^[29]

3.4 Alternatives to the bylaw

As described above, the City has identified that the goals of its bylaw are to protect the health, safety and human rights of renters, to ensure that certain essentials such as plumbing, heating and water are provided to renters, and to protect the residential amenity, character and stability of residential areas.

Other tools also address these goals. For example, existing provisions in the Fire Code and Building Code work to protect the health and safety of renters. Inspections can occur and be mandated under a bylaw that does not also draw in per-person floor area requirements and other elements that could disadvantage Code-protected groups.

The OHRC challenges municipalities, including Waterloo, to question whether their licensing bylaws add restrictions without adding additional protections.

The City states that the rental housing licensing bylaw must be examined “within the context of the broader set of municipal programs designed to address a variety of inter-connected issues, including the sufficient availability of good quality rental housing, health and safety of tenant and non-tenant municipal residents, property and community standards, and both short-term and long-term planning issues.”^[30]

The City has stated that it is not attempting to address behavioural issues through the bylaw. That is good, as a rental housing licensing bylaw is not an appropriate place to address any such issues. In documents disclosed to the OHRC by the City, a number of recommendations unrelated to licensing have been made to address complaints about behaviour issues in student housing and other types of housing.^[31]

Many of these were later implemented and shown to be effective, including:^[32]

• Community Mobilization Police Officer and Community Development, Town and Gown liaison staff visits to offending houses
• Neighbourhood building events
• Mediation service.

3.5 Implementing the bylaw

In Room for everyone: Human rights and rental housing licensing, the OHRC recommends that municipalities that are considering rental housing licensing consult with groups who are likely to be affected by that licensing, through accessible, well-advertised general meetings and also through targeted outreach to vulnerable or marginalized groups.^[33]

The City has provided the OHRC with a list of public meetings and other consultations undertaken as part of its process, including meetings with university and student union leaders, landlord groups and others before it passed the bylaw.^[34] It sent numerous mailings out to landlords. The City also offered training sessions to landlords.^[35]

A community organization that responded to the OHRC’s survey said that the City did not consult with them, but that they “…had the opportunity to comment as did any member of the public before the bylaw was passed.” However, they said they didn’t realize until more recently the effect the bylaw might have on their “usual client base” because they understood it to be more of “…a ‘student housing’ strategy.” They said they have since learned that it may affect the availability of rooming houses and have other implications for tenants.

In April 2011, an organization told the City that many tenants and other residents were unaware of the process, and assumed the bylaw related only to students.^[36]

Some residents raised concerns with the City about the lack of representation of students, and/or of renters more generally, in the process.^[37]

One person wrote about being “very concerned at the lack of representation of renters” at a consultation meeting, and asked the City to consider “moving one of the meetings to the university in an effort to attract student renters” to hear from students in addition to landlords.^[38] Another said “[g]iven the scary environment at the earlier consultations, I think staff may need to solicit meetings with non-landlord property owners, and with students and other tenants.”^[39]

At a Town and Gown meeting on June 28, 2011, a student federation representative told the City that there was a lot of “misinformation circulating” about the bylaw. ^[40]

One student tenant survey respondent said, “the consultation did not do a respectable job of engaging the citizens it was going to most directly affect.”

The City has stated to the OHRC: “Anyone who is legitimately confused about the application of the Rental Housing Licensing By-law need only contact the City. Staff will be pleased to assist.”

While it appears that the City held many publicly advertised meetings and other consultations, and conducted valuable targeted outreach to and training for landlords, it also appears that the City was not always successful in communicating information about the bylaw (particularly before it was enacted) to tenants who might be affected by it.

In Room for everyone: Human rights and rental housing licensing, the OHRC recommends that licensing bylaws be rolled out in a consistent, non-discriminatory way.^[41] Waterloo appropriately applied its bylaw to the entire city, from the outset.

3.6 The current housing environment

In Room for everyone: Human rights and rental housing licensing, the OHRC says:

In accordance with the 2005 Provincial Policy Statement,[42] municipalities should provide for an appropriate range of housing types and densities required to meet projected requirements of current and future residents by, among other things, establishing and implementing minimum targets for providing housing that is affordable to low and moderate income households.^[43]

During the inquiry, the OHRC heard concerns that the current rental housing market in Waterloo is challenging, especially in terms of cost and availability. An organization that responded to the OHRC’s survey said that it has become harder for people to find housing in Waterloo in the neighbourhood of their choice, explaining that “cost and availability are linked challenges.” The agency said that youth, trans men and women, large families, people with mental illnesses and addictions, people on Ontario Works and some Muslim families all report that landlords discriminate against them, and that some landlords resist housing women fleeing violence:

…We have landlords and neighbours tell us that youth, people with mental illnesses and addictions, and women fleeing violence, should not be housed in their neighbourhoods. Typically, these landlords and neighbours claim to have the [well-being] of our clients in mind, and state that their neighbourhoods are simply not the right ones (because they lack supports and amenities, are too far from bus routes, are unsafe, etc.) for our clients to live in.

Another organization said:

Many clients, whether in Waterloo or not, have problems finding affordable and decent housing due to their low incomes. Having disabilities, particularly mental health issues, can also make it very difficult [to] find safe and affordable housing locally. Large families (especially those on fixed low incomes) have a very difficult time finding adequate and affordable housing.

A tenant who identified as having a “lower income” shared her concerns about decreasing availability of affordable housing in Waterloo:

While I have been hearing on the radio about the need for affordable housing it seems to me that Waterloo has been making laws that are removing much of the affordable housing already available.

… Now the city has made even renting a room more difficult as not all landlords will be willing to go through the process and expense of getting licensed, and if they do will probably pass along the expense to their tenants. While it may not have been the city’s intent, it does feel to me that because I have a lower income I am not very welcome in Waterloo.

A tenant who received Ontario Works benefits said “it is already REALLY HARD” to find “reasonable accommodation,” and that “rent would go up, of course.”

The OHRC heard that some landlords rent only to students. On the other hand, one tenant said he has heard landlords say things like “students can’t be trusted and will turn everything into a party,” and many state students aren’t allowed.

A landlord recently told the OHRC that the housing market has changed in that “now there’s an enormous over-supply of housing for students… because of all the new ones that were opened up last year [in 2012].”

Some tenants raised concerns about the type of supply, however. One student tenant said:

I think the strategy they’re using is to eliminate all the low-rise buildings for students. They’re building high-level residences … [the city has passed] the bylaw so that more students will have to move into the new high-rise buildings. Like this year, next to the school, one is charging $700 per month per person – now I’m paying $450 a month.

... [They’re] eliminating the affordable housing options. The difference between $450 and $700 per month is really a lot of money. We can save 3k here [in our house] per year, vs. one of those high-rises. People renting houses use the money from OSAP – we still have to pay those loans back, and we’ll have double the housing costs to pay back.

Some landlords provided similar information. One, who had three students sharing a 3-bedroom apartment for $1,100 per month, said “they find this much more affordable than the $5-600 monthly rent (each) in the new towers that the city is promoting.”

The City stated in its 2004 Student Accommodation Study Discussion Paper that “Apartment buildings are a better form of student housing than converted lodging houses for several reasons” including their greater capacity, less significant history of noise, maintenance and property standards complaints, preference of students for smaller units (1–3 roommates), and because of the opposition of permanent residents to lodging houses.^[44]

The City opined that the bylaw cannot be examined in isolation and that “the exceptionally few lawful rental units that may have been “lost” as a result of the Rental Housing Licensing By-law have been more than amply replaced by new construction or the change in use of other, previously non-rental properties.”^[45]

The City states that:

It is the City’s best information that rents have remained stable across the municipality, that the vacancy rate has slightly increased, and that the number of rental units on the market has significantly increased since the Rental Housing Licensing By-law was passed in 2011.^[46]

In 2010, the City shared with the OHRC a number of its strategies to support a diverse housing stock, including:

• Promoting a range of housing types and tenures
• Maintaining a Town and Gown committee
• Facilitating community development programming
• Conducting a Student Accommodation Study
• Zoning many Planning Districts in the City to allow for low-rise multi-unit housing forms like duplexes, triplexes and townhomes
• Facilitating the development of affordable cooperative housing through the purchase and redevelopment of a former inner-city school
• Using development “per bedroom” charges to help smaller units
• Granting development charge payment deferrals to property developers who have provided “affordable” housing
• Granting exemptions from development charges for student residences on lands designated as “Major Institutional”
• Developing an inspection program to ensure life safety in these units
• Formally recognizing over 500 accessory apartments.^[47]

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