Winnipeg Free Press - PRINT EDITION
City eyes tax on new-home purchases
Would require co-operation from the province
The city wants new-home buyers to pay a hefty new tax.
But any such tax would need provincial approval, and the province is already sending messages it won't support this move by Winnipeg.
"We are not looking at any changes to the Winnipeg Charter that would introduce new fees or levies -- including additional fees on new-homes sales," said Jean-Marc Prevost, a spokesman for Minister Kevin Chief, who is responsible for Winnipeg.
Regardless, a majority of Winnipeg city council is prepared to support the tax on new homes to pay for growth-related infrastructure.
"Growth should pay for growth," Coun. Jenny Gerbasi said following a closed-door seminar Monday on a proposal dubbed a growth-development charge.
Councillors were briefed on a development surcharge to pay for infrastructure costs spawned by residential and commercial growth.
-- Coun. Jenny Gerbasi
While councillors weren't given a dollar amount for the new tax, Coun. Scott Fielding said that as little as two weeks ago, executive policy committee was considering a per-lot tax in the range of $10,000 to $12,000 that would raise $30 million annually.
"They're calling it a growth-based tax, but plain and simple it's a tax on new-home purchases," Fielding (St. James-Brooklands) said, citing the plan as one of the reasons he quit EPC at the end of October. "That's going to make housing a little less affordable here in the city."
Developers are now charged a variety of fees for infrastructure-related expenses for new suburban residential developments, including:
-- 100 per cent of costs for constructing residential and collector streets, intersection improvements, sewer and water, storm retention, sidewalks;
-- 50 per cent for the cost of nearby regional streets as a result of the development.
But Mayor Sam Katz said suburban growth leads to an immediate demand for library and recreational services, new fire halls and transit and regional roads -- costs that aren't covered now by developers.
Katz said the city is unable to raise enough funds from property taxes to pay for existing infrastructure and the new facilities demanded by new suburban residents.
The startling admission from Katz and his executive policy committee caught several councillors -- who have long argued suburban growth was unfairly diverting property-tax funds -- by surprise.
Councillors spent a full hour debating the costs of suburban growth at the last council meeting on a plan for a new development in south Charleswood known as Ridgewood South.
"We need to do something to pay for growth infrastructure," Ross Eadie (Mynarski) said. "Homeowners in established neighbourhoods are paying a greater share of the pie for new infrastructure in new St. Vital and new St. Boniface."
Katz said similar charges are common in most municipalities across the country, but Winnipeg doesn't have the legislative authority to impose such fees. Even the ring communities surrounding Winnipeg impose development fees, he said, but Winnipeg needs the support of the provincial government to amend the Winnipeg Charter to make such fees possible.
Katz said 12 of the 15 members of council who attended Monday's seminar voted to get provincial support, adding details on what the fee would finance and the dollar amount could be determined later.
If the province could be persuaded to approve the tax, legislation likely won't be approved until late 2014. Katz said the earliest the tax could be applied is 2015.
Mike Moore, president of the Manitoba Home Builders' Association, said he hopes the city will consult fully with developers on the new charges. He said development-agreement parameters with the city -- the rules governing who pays for what in a new suburb -- haven't been updated for more than a decade, and any new fees ought to be part of that review.
"We agree with the city that growth must pay for growth," said Moore. "We're of the view that growth pays for much more than itself."
Katz said he doesn't believe a dedicated development fee would chase homebuyers away from Winnipeg, adding the cost of a residential lot in the city has more than doubled in the last six years, to $130,000 from $60,000.
"The price of lots has been going up every year, and people are continuing to buy homes," Katz said.
-- with files from Mary Agnes Welch
Is this a genuine effort to control urban sprawl or a cash grab?
Join the conversation in the comments below.
Republished from the Winnipeg Free Press print edition November 5, 2013 A4
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