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A proper plan needed before an amount is attached to any proposed growth fee
Sep 30, 2016

by Mike Moore

In late 2013, the city of Winnipeg tried to introduce Development Cost Charges. Earlier this year, there was talk of a Growth Fee. Now, it’s being called an Impact Fee.

It doesn’t matter what label one creates, it’s still a tax on new home buyers.

To validate their argument, the city hired Toronto-based Hemson Consulting to create a report that showed that new development was costing the city money and that new growth didn’t pay its fair share.

However, that report contained numerous financial inconsistencies as demonstrated in the locally-produced 78-page MNP report (commissioned by the Manitoba Home Builders’ Association and the Urban Development Institute). The report pointed out inflated costs, improperly allocated attributions and numerous other flaws.

According to the MNP report, “There are also costs included that are questionable in their relationship to future development (in the first Hemson report).”

In terms of new developments not paying their fair share, the MNP report found that new homes built between 2000 and 2015 have added $200 million in new assessment revenue and will add $33 million annually in property taxes.

The second Hemson draft in August recommended a tax of over $30,000 per new home to offset the alleged impact of that home on the city’s infrastructure.

Within two weeks, that number was reduced to $18,000 without substantial explanation for the change.

On one hand, one might say that the city is headed in the right direction and that they appear to be reaching out to the development community in order to arrive at a number that is palatable to both groups.

However, it must be realized that no number is appropriate without a proper plan. Otherwise, you’re just throwing new money down the same rabbit hole.

When Mayor Brian Bowman says that the status quo isn’t acceptable, he’s right. Continuing to venture in the same direction without a plan to guide us is no longer acceptable.

We need to create detailed plans for regional infrastructure. OurWinnipeg is a very good conceptual plan. Now it’s time to roll up our sleeves and create detailed plans with proper costing and timing.

We need to get solid numbers for accurate pricing. No more estimates that are 300 per cent over original budgeted amounts. This will require technical experts (engineers, surveyors, accountants) to create fair market values.

We need to prioritize to ensure that all projects included in our planning exercise fit within reasonable timelines and are affordable for all citizens. We need to move from wish lists to hard decisions. Dollars should be allocated according to a value perspective.

We need to properly attribute to both new development and existing residents the costs related to new infrastructure. No one group is responsible for picking up the tab. All of us have the responsibility for paying our fair share.

Our goal must be good policy. Good plans are necessary to create good policy.

There are huge legal and financial risks associated with going in the wrong direction, including immediate and long-term financial risks if development stagnates. There could  also be a major impact on housing affordability, both new and resale.

A further risk includes a possible violation of the law, including provincial legislation.

The development industry and the city need to work together at the administrative, elected and outside resource levels to create a plan and model with the appropriate detail based on accurate data. The industry is committed to doing so immediately. Without this process, there is no chance of success.

We would like the mayor to assure us that stakeholders’ voices will not only be heard, but be given meaningful input and participation in the  process when developing proper costing for future development.

This cannot happen with  a tight deadline of January 1, 2017, to implement these proposed impact fees  on new development, which, besides residential, also includes non-residential developments and all areas of the city.

(Mike Moore is the president of the Manitoba Home Builders’ Association).