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How Ontario's rent-freeze law may hike your Sault Ste. Marie tax bill

The rent freeze isn't the issue. The issue is something else that was slipped into the same law. Rent-geared-to-income housing is no longer fully geared to income
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Social Services CEO Mike Nadeau speaks at Sault College last year during a $900,000 provincial affordable housing program launch in Sault Ste. Marie. James Hopkin/SooToday

Local officials are serving notice that provincially imposed rent-freeze legislation may significantly increase this year's municipal tax levy.

Last week, District of Sault Ste. Marie Social Services Administration Board (DSSMSSAB) agreed to freeze rents for all subsidized and market-rent units under its jurisdiction, to comply with Ontario's Helping Tenants and Small Business Act, 2020.

Passed in September and about to take effect this January 1, that law freezes rent at 2020 levels through all of 2021, for the lion's share of rented housing units.

The September law slapped down an expected 2021 rent increase limit of 1.5 per cent set by the province just one month earlier.

Subject to the year-long rent freeze are:

  • rented houses, apartments and condos, including units occupied for the first time for residential purposes after November 15, 2018
  • basement apartments
  • care homes (including retirement homes)
  • mobile home parks
  • land lease communities
  • rent-geared-to-income units
  • market rent units in community housing
  • affordable housing units created through federally or provincially funded programs

At DSSMSSAB, however, there's a lot of hand-wringing going on and the rent freeze itself isn't the issue.

"We acknowledge the need for the rent freeze," says DSSMSSAB chair Luke Dufour.

"Management fully supports that a rent freeze is needed during a time of COVID, a time of uncertainty. I don't have any problems with that," adds chief executive officer Mike Nadeau.

DSSMSSAB officials aren't bothered by the rent freeze so much as by something else that was also included in the same legislation – a change to rent-geared-to-income (RGI) housing.

That change, they say, means rent-geared-to-income is no longer fully tied to income.

As Jeff Barban, DSSMSSAB's director of housing services, explains the issue, RGI is normally intended to be about 30 per cent of your gross income.

As your income rises, you will normally pay more RGI rent.

If your income drops, so will your rent.

But the province has ordered a rent freeze.

"Tenants living in a rent-geared-to-income (RGI) unit may not have their rent increased between January 1, 2021 and December 31, 2021," Barban says.

"If the RGI calculation results in a rent decrease payable by the tenant, their rent payment would be decreased accordingly, which has not changed under current legislation."

So agencies like DSSMSSAB will get less rent money from tenants who aren't doing so well, but they're denied the usual increase from tenants whose employment situations are improving.

"To be clear, this is the piece of the legislation that is of significant concern and poses significant risk for Sault Ste. Marie Housing Corp. and DSSMSSAB, not the actual rental freeze," Barban says.

"With that happening now, we could face a loss," Barban says.

"This could be a $400,000 hit," figures Nadeau.

Unless the RGI issue is resolved, most of that loss is likely to end up being added directly to the city's tax levy.

"It's the freeze of the rent-geared-to-income calculations that is our primary concern. I can tell you that all service managers across Ontario are also voicing the same concern to their members of council or their [social services] boards."

"We want to make sure that they are aware that there are concerns at the municipal level with the act and the way it's written."

DSSMSSAB chair Dufour is writing to Steve Clark, provincial minister of municipal affairs and housing, asking for special funding to offset any revenue loss or any resulting increase to the 2021 municipal levy.

Copies of Dufour's letter will also go to the City of Sault Ste. Marie, Prince Township, Sault MPP Ross Romano, Algoma-Manitoulin MPP Mike Mantha, Northern Ontario Service Deliverers' Association, the Federation of Northern Ontario Municipalities and the Association of Municipalities of Ontario.

In other news, DSSMSSAB members learned last week that the Ontario Ministry of Health has approved $159,250 for purchase of a new Crestline Fleetmax 2.0 ambulance for the Garden River First Nation Base.

At a meeting on Thursday, the DSSMSSAB board approved a 2021 operating budget, with elements including:

  • opening a new ambulance base in October, 2021
  • creation of a new deputy chief of paramedic services position midway through 2021
  • $45,000 for expansion of the Early Years program
  • $115,000 to add a community assistance program for the local shelter system
  • total levy increase of $327,000 or 1.6 per cent, assuming the rent-geared-to-income situation is resolved

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David Helwig

About the Author: David Helwig

David Helwig's journalism career spans seven decades beginning in the 1960s. His work has been recognized with national and international awards.
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