Home builders claim city’s fee increases unwarranted

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This article was published 08/03/2016 (3537 days ago), so information in it may no longer be current.

The local development industry and home builders are challenging the city’s rationale for a massive increase in development fees in the 2016 budget.

Business owners and industry spokesmen went to city hall Tuesday and said the proposed fee increases are unwarranted and will discourage suburban and infill home construction.

“Our city is rapidly becoming a place that is no longer affordable,” Mike Moore, president of the Manitoba Homebuilders Association, told councillors on the property and development committee.

The committee spent 12 hours Tuesday — the meeting began at 9 a.m. and the budget review concluded shortly before 9 pm — on the planning department’s 2016 budget but at the end of the day were unable to agree on whether it should be supported.

Councillors split 2-2 on the question of endorsing the department’s operating and capital budgets, with Couns. Jenny Gerbasi and John Orlikow voting in favour; and Couns. Russ Wyatt and Matt Allard voting against.

“Last year we were promised a more comprehensive budget review process but it didn’t happen,” Allard (St. Boniface) said, when explaining why he voted against the department budget. “This review was rushed. This was just business as usual.”

As a result of the tie vote, the planning department budget will be forwarded to the executive policy committee without a recommendation.

Much of the committee’s time was focused on the department’s proposal to increase dozens of land development fees, some by as much as 600 per cent, related to suburban residential and infill development and commercial development.

The city argued the increases are necessary to cover the administrative costs to deal with the industry, claiming it needs to raise almost an additional $4 million to cover the planning department’s costs.

 City officials met privately with the development industry last week to explain the fee increases.

The industry representatives challenged the city’s position, pointing out the planning, property and development department — which administers the fees and deals with the industry — has generated millions of dollars in profits for the planning division in the past three years, $7 million alone in 2015.

Michael Falk, vice-president of Terracon, said the city can’t justify fee increases of any amount with those kinds of profits.

City officials later admitted that the department has been reaping huge profits: Since 2008, revenues increased 53 per cent, after inflation was factored out, while costs actually decreased 7 per cent during the same period.

But planning director John Kiernan defended the fee increases. Kiernan said while it appears the department has been reaping millions in profits every year, he said that was only achieved by taking funds from reserve accounts and reducing services. He said continuing that way is not sustainable and required the fees to be increased to reflect cost of services.

“At the end of the day, those costs exist and they have to be paid,” said Stan Dueck, the city’s manager of inspections, either by taxpayers or by the development industry.

Kiernan said some of the fee increases seem exorbitant but said the department hired a consultant to review them and the report concluded the increases are reasonable given what’s charged by other municipalities across the country.

Kiernan added that while many fees were increased, others were decreased, the overall impact is a 10 per cent increase in fee revenues. Kiernan said, if the fees are ultimately approved by council, they won’t go into effect until June 1.

The industry wasn’t convinced by the department’s explanations. Several individuals said the fee increases will have a greater impact on the small, infill builders, dealing with five to 14 units on a project.

Susan Russell, of Russell McGowan Group, said the budget will increase development fees on small projects from $500 per unit to $2,500 per unit; the cost of splitting a lot would go from $900 to $2,300.

“Those types of (projects) will be stopped by these fees,” Stacey Nickel, president of Visionary Homes, told the committee.

Moore said the cumulative cost of the new fees would increase the development costs of building a 1,600-square-foot bungalow 62 per cent, from $1,300 to $2,100.

Jerry Klein, vice-president of Genstar Development, said the impact on a 100-acre development is an additional $94,000.

Allard said he was concerned with a proposed new fee of $250 for community-based appeals to development projects, which he said would hinder public debate.

 aldo.santin@freepress.mb.ca