Grappling with Homestead – Why the AGI is not fair to tenants

Kingston tenants living at 42 Leroy Grant Drive were recently served with a notice indicating that their landlord, Homestead Land Holdings Limited, was applying for an above guideline increase (AGI). According to their application, Homestead is basing their argument in a provision within the Residential Tenancy Act (RTA) that allows for above guideline increases in cases where “[t]here has been an extraordinary increase in the cost for municipal taxes and charges for the residential complex or any building in which the rental units are located.” As will be explained in this brief article, however, despite the City of Kingston increasing municipal taxes this year, an AGI for all 169 units in the building does not make ethical sense.

There is actually a decent amount of evidence to make this argument. First, we have the AGI notice that tenants were served with itself. Second, through an inquiry filed to the City of Kingston’s Taxation/tax levy  department, we are able to see how much increased taxes have cost Homestead. When you look at the information of both, as is explained in greater detail below, it seems as though Homestead is going above and beyond what is needed to cover the increase in municipal taxes. Though I am still hoping to run this past someone with a better understanding of the RTA, based on these documents we have, I think tenants should be able to prepare a strongly-argued defense against Homestead. However, tenants should be wary of the Landlord Tenant Board’s (LTB) ability to be compassionate.

On the “Notice of Written Hearing,” Homestead revealed that they receive $168 178.40 in rent payment from the 169 units covered by the application. Even if they hiked rent by 1.8 percent, which falls within the guidelines allowed by the RTA, they would receive an extra $3 027.21 per month, or $36 326.53 per year.

Doing math and figuring out what ‘extraordinary’ means

Note from the City of Kingston

Without an inquiry to figure out the tax levy, people may figure that this approximates with how much the municipal tax increase is costing the company. However, because we do have the amount paid in municipal taxes (see image above), we can see that these numbers do not add up: In 2019, Homestead owed $325, 688.74 to the city, a 4.47 percent increase from the $311 747.43 paid in 2018. So, despite the fact that Homestead is only paying $13 941.31 more in taxes, they are trying to extract MORE than $36 326.53 from tenants, which is the amount they could legally raise via the landlord-friendly 1.8 percent guideline mandated by the RTA. Where is the other $22 385.22 going? As tenants in the building have noted, services in the building have been cut. Surely Homestead should have to answer this basic question in a hearing, no?

With all this said, it is worth exploring what is meant by an “extraordinary” increase in taxes and charges. According to the LTB:

“An increase in costs for taxes is considered “extraordinary” if it is greater than the guideline plus 50% of the guideline. The guideline used to determine if the increase is extraordinary is the rent increase guideline for the calendar year in which the first rent increase requested in the application will take effect.”

What this means is that the guideline increase (1.8 percent) plus 50 percent of the guideline (0.9 percent) is less than the percent raised by municipal taxes (to figure this out, you take the sum of the 2019 municipal tax paid and divide it by the sum of the 2018 municipal tax paid). What this shows is that the year over year municipal tax increase between 2018 and 2019 amounts to 4.47 percent. Based on this, it appears as though Homestead, despite cutting building services and the fact that they will profit even without an AGI, may have a legal argument to make at the LTB hearing.

Interestingly, the percent of year-over-year taxes paid by Homestead has decreased from 2017, when they paid $294 506.32. In other words, the 2017-18 increase was 5.85 percent, whereas the increase between 2018-19 increase was only 4.47 percent. So why are tenants receiving the AGI now, when the municipal tax increase as a percentage is less than it was in the year previous? KUT will continue to investigate and report.

In the view of the author, the LTB largely operates as a procedural mechanism that makes no ethical or normative judgements; though this mechanism does tend to reproduce the dominant ideology of liberalism, the LTB only makes its assessments based on how the specifics contained within a set of laws interprets a given issue. To the LTB, it likely does not matter that even the 1.8 percent increase goes above and beyond what is needed to maintain the building. It is important that tenants go beyond placing faith in the LTB, and that they mobilize around issues of justice and morality. The current judicial system fetishizes private property, favouring those who are owners over the tenants who actually fund the building, whose rent goes towards paying bills, upkeep and maintenance (and a few already-wealthy landlords). In no way does a court decision mean a particular situation is just, it just means that it is legal. Though I will do everything I can to help with the response to Homestead’s AGI application, we also need to expose the inherent unfairness of landlord-tenant relationships to the public; Landlord’s accrue wealth at expense of the tenant, who see their home as a place of survival, not as a money-maker. KUT needs to do more research and find out where we can best spend our energy to create a more equitable and just system for tenants.


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