Item - 2024.PH16.4

The Chief Building Official and Executive Director, Toronto Building recommends: 

1. City Council establish a new chapter in the City of Toronto Municipal Code substantially in accordance with the draft bylaw attached as "Attachment A" to this report, to regulate the licensing of renovations for residential rental units in the City of Toronto and require that the provisions apply to all rental units in Toronto unless exempted in the bylaw.

2. City Council direct that the new Municipal Code chapter come into effect on July 31, 2025.

3. City Council amend City of Toronto Municipal Code Chapter 441, Fees and Charges in accordance with the draft by-law in "Attachment D" to this report, by creating and adding a new fee for a Rental Renovation Licence of $700.00 (plus Harmonized Sales Tax) per rental unit, effective July 31, 2025, and adjusted yearly for inflation.

4. City Council direct the Chief Building Official and Executive Director, Toronto Building to include the staffing and resources, and introduction of a new Rental Renovation Licence user fee required for the implementation of the bylaw to address renovictions as described in the October 16, 2024 report from the Chief Building Official and Executive Director, Toronto Building " Implementing a Rental Renovation Licence Bylaw to Address Renovictions" through the 2025 Operating Budget process.

5. City Council direct the Chief Communications Officer, Strategic Public and Employee Communications, in consultation with the Chief Building Official and Executive Director, Toronto Building, and the Executive Director, Housing Secretariat to develop a communications strategy with appropriate funding established through the 2025 budget process. This strategy should include a multilingual public education campaign for Toronto tenants, landlords, and other interested parties, focusing on the following:

a. Informing tenants of the Bylaw.

b. Informing landlords of the new licensing standards and their obligations under the Bylaw.

c. In partnership with Toronto Building and the Housing Secretariat informing relevant advocacy and industry associations about the Bylaw to enable their support for both tenants and landlords; and

d. Implementing the strategy in two phases: 1) The initial rollout of the new bylaw, and 2) A continued program to educate landlords and tenants.

6. City Council request the Chief Building Official and Executive Director, Toronto Building, in consultation with the Executive Director, Housing Secretariat and Chief Communications Officer, Strategic Public and Employee Communications to develop publicly accessible communication materials to support the effective administration and enforcement of the bylaw, including multi-lingual guidelines for landlords and tenants to support the bylaw requirements for a Tenant Accommodation Plan or Tenant Compensation Plan.

7. City Council direct the Chief Technology Officer, Technology Services, in consultation with the Chief Building Official and Executive Director, Toronto Building to support the effective administration and enforcement of the Rental Renovation Licence Bylaw, by ensuring that any required technology enhancements identified by Toronto Building are implemented and a searchable online registry for Rental Renovation Licences is available prior to July 31, 2025,

8. City Council request the Chief Building Official and Executive Director, Toronto Building, in consultation with the Executive Director, Housing Secretariat and Chief Technology Officer, to monitor and provide a status update to City Council on the implementation of the Rental Renovation Licence Bylaw by July 31, 2027, including key indicators such as the number of licences issued, tenant inquiries received, enforcement actions taken, communications strategies implemented, and recommendations for any amendments to the Bylaw, technology resources and support, or staffing levels, in order to strengthen its effectiveness in addressing tenant evictions in the City of Toronto related to the illegitimate use of N13 notices to end tenancy.

9. City Council authorize the City Solicitor to introduce the necessary bills to give effect to City Council's decision and authorize the City Solicitor to make any necessary clarifications, refinements, minor modifications, technical amendments, or bylaw amendments as may be identified by the City Solicitor and the Chief Building Official and Executive Director, Toronto Building.

This report responds to the June 26, 2024, City Council directive to staff to develop a “Hamilton-style” renovictions bylaw (Renovictions Bylaw) and implementation framework to protect tenants and prevent "renovictions". A renoviction is when a landlord illegitimately evicts a tenant by alleging that vacant possession of a rental unit is needed to undertake renovations or repairs. Renovictions can include refusing to allow a tenant who has exercised their right of first refusal to return post-renovation, illegally raising the rent on a returning tenant, or not undertaking major renovations after evicting renters. This results in the displacement of tenants, the permanent loss of affordable market rental housing, and contributes to rising homelessness in Toronto.

As rent policies and landlord-tenant matters fall under provincial jurisdiction, the City of Toronto has urged the Province to take action against renovictions, including enforcing the Helping Homebuyers, Protecting Tenants Act, 2023 (Bill 97), improving Landlord and Tenant Board processes, introducing vacancy rent control, requiring temporary relocation assistance during renovations, and creating a centralized data system for rental properties and evictions. In the absence of these provincial changes, Toronto has developed local solutions. In 2022, City Council adopted a Renovictions Policy to guide the development of a bylaw to curb evictions done under the pretext of a renovation, protect tenants, and preserve affordable rental housing.

The City of Hamilton was the first Ontario municipality to pass a bylaw requiring landlords to obtain a licence before undertaking renovations that necessitate tenant eviction. In June 2024, the Planning and Housing Committee reviewed a staff report analyzing Hamilton’s bylaw and directed staff to undertake consultations with affected stakeholders and recommended a similar approach for Toronto. Over August and September, the City undertook a multi-channel consultation program consisting of focus groups with housing advocates, tenants rights experts, landlord and tenants associations, six city-wide in-person consultations and one virtual consultation, and a public survey. The results of this feedback, and analysis by City staff, have informed the Renovictions Bylaw proposed in this report that will require landlords to:

• Apply for a Rental Renovation Licence within seven days of issuing an N13 notice to end tenancy
• Obtain a building permit before applying for the Rental Renovation Licence
• Obtain and submit a report from a qualified person identifying that the renovation or maintenance work is so extensive that the tenant must leave the unit, and pay a Rental Renovation Licence fee of $700.00 per unit
• Post a Tenant Information Notice at the subject unit to inform the tenant of the licence application and to enable the tenant to seek information about their rights
• Complete a plan to provide tenant(s) who choose to return to their units with temporary, comparable housing at similar rents, or provide monthly rent-gap payments (based on post-2015 average market rents) to cover the rent difference, with tenants finding their own temporary housing
• Provide moving allowances to all tenants
• Provide tenants with severance compensation where the tenant is choosing not to return to the unit after the renovation or repair work is complete
• Post the issued Rental Renovation Licence on the door of the unit

This report recommends the Renovictions Bylaw take effect on July 31, 2025, allowing staff sufficient time to undertake appropriate education and communication efforts. The Toronto Building Division will implement and enforce the bylaw. Toronto Building staff are well positioned to inform landlords of their obligations under the bylaw early in the building permit process and will develop clear, understandable and multi-lingual public-facing guidelines to support compliance.  Staff heard clearly during public engagement of the importance of proactively updating tenants on the status of renovation licence and building permit-related work. Toronto Building will be actively monitoring building permits on units where renovation licences have been issued to support the timely completion of work and facilitate the ability of tenants to return to their rental unit as quickly as possible.

The proposed framework is intended to balance the need to address the misuse of renovations as an excuse to evict tenants, with the need for renovations and repair work that are necessary in Toronto with its often aging, existing rental housing stock. Adopting Toronto’s Renovictions Bylaw will significantly improve health, social, and economic outcomes for tenants and support the HousingTO Plan.

This staff report has been written in consultation with the Housing Secretariat, Municipal Licensing and Standards, Legal Services and Strategic Public and Employee Communications.

During the consideration of PH13.7 entitled "Renovictions Policy Implementation: Review of Hamilton Renovation Licence and Tenant Relocation By-law and developing a Toronto Renovictions Bylaw", City staff indicated that the implementation of a bylaw to address renovictions could not be fully funded through cost recovery and would require new and dedicated funding to operate a renovation licensing program.  This would mean that Toronto Building is no longer fully funded by building permit fees under the Building Code Act with the remainder to be funded by the property tax base.

Implementation of the recommendations contained in this report to establish and operate the proposed Renovictions Bylaw will require additional permanent staff resources for handling inquiries, operating a licensing program, conducting investigations, and undertaking enforcement actions.

Eight additional Toronto Building staff will respond to general inquiries, receive and review applications, and issue licences. Six additional inspectors will enable Toronto Building to enforce the Renovictions Bylaw and carry out inspections and investigations.

It is estimated that the 2025 cost (half-year) of these 14 positions would be $0.938 million gross, and the full year impact will be $1.782 million gross in 2026. The report also recommends a comprehensive public education and communication strategy which will cost approximately $0.5 million gross, prior to the Renovictions Bylaw’s effective date on July 31, 2025 and up to $0.3 million gross in 2026 and subsequent years to fund continued communication actions.

The City’s User Fee Policy requires that new fees be determined on a cost recovery basis. However, it is difficult at this moment to accurately predict licence volumes based on available data, making it problematic to determine an application fee that would enable full cost recovery. Consistent with other municipalities pursuing a renovation licensing program, staff recommend that the permit fee be established with low-cost recovery. Further, through the engagement process, staff heard that if a fee was too high, it may incentivize N13 notices during the implementation period, prior to the bylaw’s effective date, or incentivize non-compliance. 

The recommended licence fee is $700.00 per rental unit which results in annual revenue of $0.112 million based on an estimated 160 renoviction licences. A strategic low cost-recovery fee (of approximately 6 percent) is recommended in order to mitigate against the loss of rental stock due to high costs of compliance, avoid discouraging landlords from investing in property maintenance and routine repair of existing rental units, and encourage compliance where a tenant is appropriately required to vacate the unit. The recommended fee is consistent with the licence fee adopted by the City of Hamilton ($715.00).  

Multi-tenant Housing (MTH) operators and yet-to-be licensed Multi-tenant Housing operators who are undertaking renovations to comply with requirements of the Multi-tenant Housing framework would be exempt from the proposed renovation licence application fee, as discussed in this staff report. While the exact cost of providing a fee waiver for Multi-tenant Housing operators is difficult to determine while the new Multi-tenant Housing framework is being implemented, staff anticipate that it would not have a significant financial impact due to the small scope of this housing type compared to other residential rental housing types.

Under the User Fee Policy, the recommended licence fee will be reviewed annually as part of the budget process in order to adjust for inflationary changes and reflect the level or standard of service delivery. 

Taking into account the user fee revenue, the balance of $1.970 million required to operate the program is proposed to be funded 60 percent through building permit fees under the Building Code Act. In 2025, the half-year impact to establish the program would be $1.382 million gross and $0.38 million net after considering the licence fee and the annualized impact would be $1.970 million gross and $0.788 million net in 2026.

As previously directed by City Council on June 24, 2024 during the consideration of PH13.7, the Chief Building Official and Executive Director, Toronto Building, will report through the 2025 and 2026 Budget processes on the full budget and resource impacts of the Renovictions Bylaw implementation as described in this report.

The Chief Financial Officer and Treasurer has been advised of the financial impacts associated with this program to be considered along with other priorities in the 2025 and future budget processes.