Home builders, developers lawyer up in battle against new city fees

Hey there, time traveller!
This article was published 16/08/2016 (3375 days ago), so information in it may no longer be current.

Groups representing home builders and developers in the city have hired consultants, lawyers and lobbyists for what will likely be a protracted battle over city hall’s plans to impose new charges on the building industry.

City hall hired a consulting firm to conduct what it called a “growth study” but what it’s actually doing is preparing a plan on how city hall can levy new fees on developers and builders.

“We want to make sure that growth is paying for growth,” Mayor Brian Bowman said Tuesday. “Like I’ve said before… It really is a choice between higher property prices for some versus higher property taxes for all of us.”

The industry is concerned the city hall study is being rushed to reach a pre-determined conclusion in time for new charges to be imposed in the next budget year.

“There’s been zero meetings between the development community and the city regarding any growth tax — just a desire to implement,” said Mike Moore, president of the Manitoba Home Builders’ Association.

There has been a debate within city hall for years over the costs of suburban development, or suburban sprawl as it’s become known: is building new neighbourhoods on what was once farmland straining the city’s ability to pay for services demanded by those residents?

Developers do pay the costs for infrastructure related to their projects: underground water and sewer lines, roads, sidewalks, street lights and park space. But Bowman said he’s looking at the bigger picture: those developments in the suburbs stretch regional services — roads, first responders, recreation and leisure and sewer and water — that aren’t paid for by developers and must be carried by all taxpayers.

The industry denies new suburbs are a financial burden. “New housing developments in Winnipeg more than pay for their own infrastructure costs and in fact contribute millions of extra tax revenue dollars to the city for use in providing services in other neighbourhoods,” is the statement contained on the homepage of the Manitoba branch of the Urban Development Institute, which represents the big developers, planners and engineering firms operating in the city.

The industry said it is concerned that any new fee or tax will increase the cost of new homes and could slow demand. In Calgary, the new development charges are expected to increase suburban development costs between $122,000 to $135,000 per hectare; charges for infill development are based on a complicated formula that looks at net population or business growth.

It’s not like this was a surprise for the Winnipeg industry. Bowman campaigned on a pledge to find an alternative to property taxes to finance city growth and in the spring he announced that city hall needs a new growth tax to pay for infrastructure costs related to new development. The study, by Hemson Consulting, is looking at what other municipalities have done and is meeting with local builders and developers.

The issue gained prominence almost three years ago when former mayor Sam Katz and city council made the same argument, that it had to impose new development charges to recover the costs put on additional services needed by those new neighbourhoods. Back in the fall of 2013, however, city hall said it didn’t have the ability to levy those charges on its own and needed the province to amend the City of Winnipeg Charter to give council those powers.

The Selinger government said it would not entertain any new taxes — even if it’s city hall imposing them — and would not entertain the suggestion.

Skip ahead to a new mayor and now the city’s position is that it does have that power. City officials have never explained their about-face on this issue and it’s expected the consultant report should state one way or the other if indeed the city can unilaterally impose new charges on the development industry.

Hemson Consulting met with builders and developers for the first time only last month and has another meeting Thursday morning. The firm’s first draft is due before that meeting and a final report will be submitted at the end of the month.

“No process has been followed,” Moore said. Winnipeg is giving the local industry two meetings while other municipalities took more time and had more meetings before imposing new fees. 

Moore points to Calgary, where city officials formally met with the building and development industry 44 times over a two-year year period before reaching consensus on new growth fees that were approved by Calgary’s city council in January and are being phased in over a two-year period.

“We’re expecting some hard-and-fast recommendations or at least policy recommendations” at Thursday’s meeting with Hemson Consulting, Moore said.

Moore said he’s puzzled by the city’s new-found position that it does have the authority to impose a new fee or tax on the industry. The home builders brought their legal counsel to the first meeting with Hemson in July and have hired its own consulting firm, MNP LLP, to help it develop a strategy to counter city’s hall plan. 

A lobbyist, Upstream Strategy Group, is also working on behalf of the industry to oppose the proposed fee.

“We need legal counsel to determine the possible legality of various proposed taxes,” Moore said. “Just saying it doesn’t make it so.”

Bowman dismissed the industry’s concerns that the process is being rushed. He said he’s had numerous discussions with Moore on the issue and the local industry is aware of the debate that’s taken place elsewhere. The industry, Bowman said, wanted proof that growth isn’t paying for itself and the Hemson report will provide council with the information it needs to make a proper decision.

Concerns that new charges would slow home building or scare off buyers never materialized in other cities where industry raised the same argument, Bowman said, adding Winnipeg is the last major city in the country to develop and impose growth development charges. 

“This isn’t just about one industry,” Bowman said. “This is about Winnipeggers and the building of our city for the future.”

aldo.santin@freepress.mb.ca