City keeping 2019 impact fee hike a secret, frustrated home-builders say

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This article was published 12/12/2018 (2519 days ago), so information in it may no longer be current.

Winnipeg home-builders are anxiously waiting to find out how much the city’s impact fee will rise in the new year.

The controversial fee — which currently adds roughly $5,300 to the cost of a small new home in the suburbs — rose by five per cent Jan. 1, the first increase since its implementation in May 2017.

“We’ve asked repeatedly that builders get notification by the end of November,” said Lanny McInnes, president of the Manitoba Home Builders Association. “That would give us a month to prepare budgets, make any changes in contract pricing so that when it’s implemented Jan. 1, the builders are ready to go so they don’t have to change contracts after the fact.”

The impact fee is a charge on new residential development in suburban areas, mostly on the city’s fringe. It was approved by council in October 2016. Although 10 areas were identified, has occurred in only six to date: Wilkes, Waverley West, Old Kildonan, Transcona West, South St. Boniface and North Henderson.

The fee was imposed to offset city costs associated with infrastructure services required in new housing developments, including recreational and leisure facilities and transit.

The initial rate in 2017 was $54.73 per square metre ($5,084 per 1,000 square feet) and it jumped to $57.47 per square metre ($5,338 per 1,000 square feet) this year.

The home-building industry is challenging the legality of the fee. McInnes said the trial is expected to begin in October 2019.

The bylaw authorizing the fee also provided for annual increases every Jan. 1, to be determined by the city’s chief financial officer’s calculation of the local construction rate of inflation, to a maximum of five per cent.

Coun. Brian Mayes, chairman of the property and development committee, said city hall has for months been using the figure of three per cent for its construction inflation for 2019 and he doesn’t understand why that amount hasn’t been given to the home-building industry.

“McInnes is frustrated and I’m frustrated and I can’t explain why he hasn’t been told,” Mayes (St. Vital) said. “My understanding was that we would have a number by the end of November.”

Mayes said members of council were informed by email from the city’s economist at the beginning of April that all civic departments were advised to incorporate increases of three per cent into their budgets as a result of construction inflation, adding would make sense for that to be the impact fee increase in 2019.

Mayes said the internal discussions involved monitoring any last-minute increases that could alter the construction inflation rate.

City officials have cited “construction inflation” when project bids come in higher than expected, pointing out that construction inflation is always higher than Statistics Canada monitored Consumer Price Index (CPI).

The economic outlook distributed to members of council and department heads in April included a cursory definition of “construction inflation.”

“For the construction forecast, we look at things we expect to influence price change, such as the demands placed on the local construction market, as well as the components of supply, like material, wages and machinery,” city economist Tyler Markowsky said in the April email.

McInnes said the industry has repeatedly asked city hall to explain how it arrives at construction inflation figures but the administration has refused.

“We’ve asked the city to be transparent in how this is determined but we haven’t been successful in getting that information,” McInnes said, adding civic officials even refused an access to information request.

aldo.santin@freepress.mb.ca