Judge orders City of Winnipeg to refund growth fees
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Hey there, time traveller!
This article was published 07/07/2020 (1535 days ago), so information in it may no longer be current.
A judge has ordered the City of Winnipeg to pay back all funds accumulated via its controversial impact fee — an amount that exceeded $32 million by March 31.
A court decision released late Wednesday afternoon concludes the civic growth fee charged to developers and homebuilders on construction in some new neighbourhoods is an “invalid indirect tax.”
“In my view, the connection between the use of revenues generated from the impact fee and the persons being regulated is doubtful and, as a result, I find that the impact fee imposed… is an invalid indirect tax, and therefore an unenforceable tax beyond the legislative authority granted to the city to collect,” writes Justice James Edmond in the decision.
The decision goes on to order the city to “refund the impact fees to persons that made the payments.”
Edmond concludes the city must refund developers and builders — including any interest the funds earned while the city held them in reserve — with that refund to then be passed on to affected homeowners.
The decision follows a legal challenge from the Manitoba Home Builders’ Association, Urban Development Institute, and other builders, which called upon the court to quash the fee and declare it invalid.
Mike Moore, MHBA past-president, said the ruling confirms the builders’ concerns.
“In essence, the (judge) said it’s not legal. You could also say it’s not fair,” said Moore, adding he hopes the decision will clear the way for a new discussion on how best to address city growth.
“(The) development industry is looking forward to sitting down with the city and engaging in a planning process for the future growth of the City of Winnipeg.”
The builders also claimed the fee was discriminatory, since it was charged in only some neighbourhoods. The judge disagreed with that claim.
“In essence, the (judge) said it’s not legal. You could also say it’s not fair.”
– Mike Moore, MHBA past-president
The city introduced its impact fee in May 2017. As of Jan. 1, it added $5,249.96 per 1,000 square feet to the price of impacted homes.
City council also planned to gradually add the levy (also known as a growth fee) to commercial and infill construction, but never did so.
When council voted to add the fee in 2016, supporters argued it would raise revenue to ensure new development pays for the cost it creates for city infrastructure and services. Developers argued new builds already paid for those costs.
Coun. Scott Gillingham (St. James) voted against the fee’s implementation. As council’s finance chairman, he also lobbied to ensure the revenue was left unspent in a reserve until the court case ended.
Gillingham said there was some “pressure” to use the funds earlier, but he’s pleased that didn’t happen, as otherwise Wednesday’s decision could add a major financial blow to the city.
“It would be a significant hole to climb out of, had we spent the money in a year where we’re facing the financial pressures of COVID-19,” said Gillingham.
“It would be a significant hole to climb out of, had we spent the money in a year where we’re facing the financial pressures of COVID-19.”
– Coun. Scott Gillingham
Coun. Brian Mayes (St. Vital), a former property and development chairman, said the loss of potential reserve would be noticed.
“Obviously, a lot of good could be done with that money… I guess we’ll figure out whether there’s a viable appeal,” he said Wednesday.
About $7 million of impact fees were earmarked to pay for a new fire hall in the Waverley West neighbourhood. Its construction isn’t set to begin until 2023, however, which Gillingham said provides time to find alternate funding.
The city said it has not yet decided if it will appeal the judge’s decision.
“We are disappointed in the decision, but will need to take more time to review the decision and consider our next steps,” Felicia Wiltshire, Winnipeg communications director, wrote in an emailed statement.
Mayor Brian Bowman, a champion of the fee, declined comment Wednesday. His office stated the mayor will wait for the public service to review the legal decision before he speaks about it.
Meanwhile, Coun. Kevin Klein (Charleswood-Tuxedo-Westwood) called the decision unfortunate, but unsurprising.
“We should be able to come out right away and say: ‘You know, we did this wrong,’” Klein said, noting he would rather see the city present fully transparent increases to property taxes than introduce new fees.
— with files from Julia-Simone Rutgers
Joyanne.pursaga@freepress.mb.ca
Twitter: @joyanne_pursaga
Joyanne Pursaga
Reporter
Born and raised in Winnipeg, Joyanne loves to tell the stories of this city, especially when politics is involved. Joyanne became the city hall reporter for the Winnipeg Free Press in early 2020.
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