Impact-fee decision presents opportunity

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This article was published 17/8/2020 (350 days ago), so information in it may no longer be current.

Opinion

In early July, the Manitoba Court of Queen’s Bench declared the City of Winnipeg’s impact fees, a charge levied on new construction in suburban housing developments, are not within the city’s legal jurisdiction, and ordered that the money collected be refunded to developers.

The controversial fees, which exist in some form in most Canadian cities, were implemented in 2017, attempting to balance the disproportionate cost of infrastructure and services required to support the sprawling, low-density city we have built over the past several decades.

Our city once grew by simply extending the existing roads, sewer pipes and streetcar lines, adding new grid-pattern residential streets along them. One neighbourhood blended seamlessly into the next. Walk south along the length of any street in River Heights, for example, and on the first block you’ll see houses built in the 1910s, with every few successive blocks representing a new decade of growth, until you eventually arrive at the homes built in the 1970s.

That’s when we started building new subdivisions as disconnected islands, far from existing neighbourhoods — a development model that stretches new infrastructure and services across great distances at great cost.

With the city currently growing three times faster in area than in population, the resulting lower density means each individual Winnipegger is today responsible for the cost of maintaining almost 50 per cent more land area, and its corresponding services and infrastructure, than they were a generation ago.

On the surface, the court decision striking down impact fees seemed to be a loss for those wanting to address these issues by building a more environmentally and economically sustainable city that is able to address our $7-billion infrastructure deficit, crumbling roads, increasing emissions and rising taxes.

Upon closer examination, the judgment is not a loss. It is a very important opportunity. The court found the city has the legal right to impose a charge on new housing, but it must demonstrate that it is a regulatory fee directly tied to costs incurred by development. This is where the opportunity lies.

Developers pay for infrastructure within new subdivisions and part of the connections to it, but once maintenance and replacement is required, the taxes from within the development become insufficient to be self-sustaining. Our strategy thus far has been to simply build more subdivisions and use the new taxes to maintain the older areas, until the new subdivision infrastructure ages and the process repeats itself.

The money raised through Winnipeg’s impact fees, $30 million over three years, was an insignificant amount relative to the issue it was supposed to solve — a Band-Aid attempting to cover a fatal wound.

The only long-term, sustainable solution is to change how our city grows, and if implemented strategically, impact fees could play an important role in achieving this. Used as a planning tool, they could guide the location and form new development across the city in a more sustainable way.

An argument often used against impact fees on new suburbs is that infill growth also comes with a cost. While it is true that infrastructure and services in existing communities are more heavily taxed as the population grows, the most efficient way forward is to promote growth that requires as little infrastructure and new services as possible.

The less we build to accommodate population growth today, the less we will have to maintain and replace in the future. As many people as possible paying for a little as possible should be the goal.

Development charges in many cities use an area-specific pricing framework to achieve this. Density and distance gradients are established to reflect the true long-term impact on infrastructure costs more closely, while influencing growth patterns to meet higher density planning goals. Land that is farther from existing infrastructure, or in less-desirable development areas as identified in strategic plans, is charged much higher fees to encourage developers to look at smaller, higher-density subdivisions that are more connected to mature neighbourhoods and able to tap into existing services and infrastructure.

Higher construction and land costs, uncertain approval processes and community opposition make infill development more costly and challenging than construction on the fringes of the city. Impact fees can — and should — be used to level the playing field on these costs, potentially through direct incentives or investment in existing infrastructure upgrades, such as combined sewer replacement, that enable and promote more development in mature neighbourhoods or on targeted development sites.

Coupled with a fee structure for distant suburban growth that is a more appropriate reflection of the long-term costs to the city, this can promote smarter growth and encourage a more compact city form.

Winnipeg’s infrastructure deficit has been created by reduced density, not by a lack of revenue. Simply collecting growth charges will not change that. Impact fees are not the solution to the effects of suburban sprawl; they are a reaction to it.

The court told the City of Winnipeg that any new charge must specifically reflect real costs to growth. With vision and foresight, we can take advantage of this requirement and create a strategy that uses impact fees as a powerful planning tool, curbing the city’s outward expansion and promoting inward growth, creating a more prosperous and sustainable city for the future.

Brent Bellamy is creative director at Number Ten Architectural Group.