Impact fee puts $2M in city coffers

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This article was published 06/10/2017 (3112 days ago), so information in it may no longer be current.

City hall has collected almost $2 million in impact fee revenue from developers and builders since May 1, twice as much as officials were projecting to the end of the year.

New figures to the end of September show that builders and developer paid $1.96 million on permits taken out on 216 residential units on the city’s suburban fringes.

“It’s more than what city hall was expecting, but it’s likely a lot less because so much more work was done before May,” said Mike Moore, spokesman for local homebuilders and the residential development industry.

A year ago, council approved a controversial new fee on new home construction, to be applied May 1.

The fee is added to permits taken out for new home construction in 10 suburban fringe areas, at the rate of $5,084 for every 1,000 square feet.

The fee is supposed to offset city costs associated with services required as a result of new development, including recreational and leisure facilities, transit and other infrastructure.

Similar charges for other types of development — industrial, commercial, office and institutional space — are supposed to come into effect in those same suburban areas no sooner than November 2018, followed by charges for all development in all areas of the city by November 2019.

The residential development and homebuilding industries opposed the fee and filed a legal challenge in January.

They argue the city doesn’t have the legal authority to impose the fee and that the industry already pays for growth-related infrastructure. Both sides are preparing affidavits in support of their positions.

No hearing dates have been set.

Right now, the $1.96 million is sitting in a dedicated reserve account waiting for council to allocate the funds to the appropriate infrastructure projects, but the politicians and administration are divided on when the money should be spent.

Coun. John Orlikow, chairman of council’s property and development committee, said he would like to see council allocate the $1.96 million to specific capital projects.

He acknowledged there are others on council and in the administration who want to wait for the outcome of the legal challenge before spending that money.

Orlikow said he sees no reason for caution, explaining the city’s experts and its legal staff told council it could impose the new fee.

“If we didn’t believe our legal case was solid, then we shouldn’t have done this,” Orlikow said.

“My opinion is that money is available now. We don’t need to wait for (the outcome) of a legal case — we know we’re in the right, and we should go forward with this.”

Orlikow said despite the court challenge, he hopes to form a working group with representatives of residential developers and homebuilders.

It would provide council and the administration with recommendations on how the impact fee would be applied to other types of development and make recommendations on future fee rates based on market conditions.

The working group is supposed to make recommendations on which projects should be funded by the new fee.

While council approved the fee to be charged in 10 suburban areas, permits were only taken out in five.

The report shows most of the impact fee revenue has been collected from new residential construction in two areas: Waverley West (69 units) and Old Kildonan (63 units). Combined, developers and builders paid $1.2 million in impact fees.

aldo.santin@freepress.mb.ca