Hey there, time traveller!
This article was published 9/7/2020 (195 days ago), so information in it may no longer be current.
If Mayor Brian Bowman and Winnipeg council could have proven, with evidence, new housing developments were not paying their fair share of city costs, the impact fee introduced in 2017 would likely have survived a court challenge.
Court of Queen’s Bench Justice James Edmond struck down the city’s controversial impact fee Wednesday, deeming it an "indirect tax" that was unconstitutional.
It’s not that the City of Winnipeg didn’t have the legal right to impose a fee on new housing developments to pay for associated costs. It did, under the City of Winnipeg Charter (a provincial law), as long as it could demonstrate it was a regulatory fee, tied to costs created by new developments.
The problem is the city failed to prove that in court, leaving the judge to conclude it was just an ordinary tax, designed to raise money for general revenues. The city doesn’t have the constitutional right to impose such a tax. As such, it was quashed.
The stated objective of the impact fee, one of Bowman’s signature policies, was to force homeowners in new developments to pay for capital costs — such as roads, bridges and civic buildings — they were allegedly responsible for. "Growth doesn’t pay for growth," has been the mayor’s political mantra since he first introduced the fee.
However, politics and law don’t always see eye-to-eye.
From the beginning, Bowman failed to provide any evidence new developments are a net financial drain on city coffers. In fact, all the prior studies showed they were either net contributors to the public treasury or operated on a break-even basis.
When the city failed to make its case in court, the judge saw the impact fee for what it really is: a tax with no connection to paying for costs associated with growth.
"There is no requirement that the impact fee collected be used only to fund capital projects associated with or caused by development where the impact fee is collected," Edmond wrote.
When Bowman was challenged in 2016 to provide evidence to support his claim that growth doesn’t pay for growth, the city hired Hemson Consulting Ltd. to make the economic case for a tax on new developments.
Politicians often hire consultants to provide political cover for their agendas. While Hemson regurgitated city data that outlined the "infrastructure deficit" (data, the judge said, the consulting firm did not independently verify), the firm produced no evidence new developments were not paying their share of capital costs. It concluded "growth does not pay for growth" without substantiating the claim with evidence; the court described the findings as an "opinion."
"While Hemson has undertaken an assessment of the overall cost associated with growth in the city, the revenues derived from the impact fee collected in certain developments are not directly connected to the costs generated by those developments," wrote Edmond.
Developers pay the city for a wide range infrastructure and other costs when building new communities, such as Waverley West, including all new local roads, sidewalks, street lights, sewer and water infrastructure, greenspace and much more.
Those costs are reflected in the prices of new homes. Homeowners then pay property taxes and utility charges, like everyone else, as their contribution to new capital and other costs around the city. Their property taxes, for example, help pay for the tens of millions of dollars spent on separating combined sewers every year in older parts of Winnipeg to reduce the amount of raw sewage going into rivers. (New developments have separate sewage and runoff systems.)
Until the city can demonstrate such new developments are a net drain on the treasury, impact fees — at least the kind Bowman tried to ram through — are nothing more than a tax and have nothing to do with paying for the costs of growth.
Tom has been covering Manitoba politics since the early 1990s and joined the Winnipeg Free Press news team in 2019.