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The City of Winnipeg stopped collecting impact fees as of Thursday morning, the day after a judge declared the levy an "invalid indirect tax."
Michael Jack, the city’s chief corporate services officer, said it’s not clear how long the fee collection will be suspended; the city is reviewing the judge’s decision to determine if it will file an appeal.
"In terms of how long that suspension remains in effect… that really is subject to whatever the next steps are going to be," said Jack.
The judge ordered the city to refund all revenue it has collected through the fee to date: which exceeded $32 million as of March 31.
Jack called it "premature" to say when the city might issue refunds but indicated that won’t happen until all legal options are concluded.
Posted: 09/07/2020 7:00 PM
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.
"Once all the parties actually have judicial clarity and there are no further avenues for appeal, we’ll then be in a position to consider the issue of refunds," he said.
The city introduced the impact fee in May 2017, applying it to new homes in some new neighbourhoods. As of Jan. 1, 2020, it added $5,249.96 per 1,000 square feet to the price of those homes.
While the court decision has cut off a substantial revenue stream for the city and threatens to drain a reserve fund, Mayor Brian Bowman noted it also confirmed the city’s ability to charge some form of impact or growth fee.
"The court has confirmed that growth isn’t paying for growth and the City of Winnipeg, under our legislation, does have the authority to impose an impact fee," said Bowman.
The mayor noted Justice James Edmond found the city had the authority to impose the impact fee within its charter, something he called precedent-setting.
"For those property owners that have felt that they have been unfairly subsidizing the cost for suburban sprawl, this decision does provide a road map forward. It’s a light at the end of the tunnel for existing homeowners," said Bowman.
“For those property owners that have felt that they have been unfairly subsidizing the cost for suburban sprawl, this decision does provide a road map forward. It’s a light at the end of the tunnel for existing homeowners." — Winnipeg Mayor Brian Bowman
Edmond found fault with the way the city levied the fee, however, concluding it lacked "any definite or clear requirement that the monies collected be tied back to growth caused by the developments" where it was charged.
Bowman said the city won’t rule out any options. But he offered no detail on whether he will personally lobby for a different type of growth fee.
When council voted to add the fee in 2016, the mayor and other supporters argued it would raise revenue to ensure that new development pays for the costs it creates for city infrastructure and services. Developers quickly opposed that view, arguing new builds already covered those costs.
While Bowman was an early champion of the growth fee, he rejected any suggestion that council rushed to implement one.
"We’ve seen mayor after mayor, councillor after councillor for decades, talk about how growth is not paying for growth… I would not argue that this has been a quick process," he said.
Some councillors expressed concern about the city’s recent legal advice, noting an arbitrator also rejected council’s attempt to revamp the Winnipeg police pension plan and the city was found in contempt of court for how it considered the Parker Lands development application.
"I’m concerned. I think we have got a problem that we have to face with the advice that we’re getting. This is the… second or third major case in a row that the city has not won," said Coun. Scott Gillingham, who chairs the finance committee.
Coun. Shawn Nason said he’s concerned poor political choices played a role in the recent string of legal losses.
"Is it bad policy that’s leading to this?" he asked.
“We’ve seen mayor after mayor, councillor after councillor for decades, talk about how growth is not paying for growth… I would not argue that this has been a quick process." — Winnipeg Mayor Brian Bowman
The mayor said he believes legal challenges are a risk of making substantial changes, not evidence of flawed decisions.
"Any time you are trying to effect change, not everybody is going to want to see things change. The status quo works for some," said Bowman.
The president of the Manitoba Home Builders’ Association, who helped launched the legal challenge, said his organization is ready to consult wit the city.
"Our preference would be… to sit down with the city to create a plan… that’s sustainable and is based on solid planning principles," said Lanny McInnes. "A rigorous cost-sharing mechanism should be part of that."
Born and raised in Winnipeg, Joyanne loves to tell the stories of this city, especially when politics is involved. Joyanne became the city hall reporter for the Winnipeg Free Press in early 2020.
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