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Impact fee initially affects emerging neighbourhoods
Nov 18, 2016

Regardless of what it’s termed —a growth tax , growth fee or an impact fee  in its most recent form — we need to know where we are now with respect to the city’s plans to pay for growth.

First, why is the city even considering growth or impact fees? Here is how they explain their predicament and as a result of a perceived need to look at other ways of paying for a growing city with increased infrastructure requirements.

The city of Winnipeg has gone through a period of growth that has impacted the city’s operating and capital costs and revenues. This growth is placing pressure on public infrastructure and the need for city council to invest in additional capacity to accommodate growth. At the same time, the condition of existing infrastructure is deteriorating.

Both of these factors created an infrastructure deficit that the city has to address. Currently, our only option is to fund both deficits with the property tax. As such, the city is looking to determine the relationship between growth-related costs and revenues.

Here are the key take-aways after council voted 10-6 last month in favour of the Executive Policy Committee’s (EPC) phased-in approach to levy impact fees on new development.

The impact fee will be phased in over three years and came into effect on November 1, 2016. No fees will be collected for the first six months. Beginning May 1, 2017, collection of impact fees will commence for residential developments, at a rate of 50 per cent of what was recommended in September’s administrative report.  It works out to roughly $500 for every 100 square feet so the fee will be $10,000 for a 2,000 square-foot  home.

This impact fee will only apply to residential developments outlined in new and emerging neighbourhoods as depicted in OurWinnipeg’s Complete Communities. You can see the outlined areas at winnipeg.ca — click on impact fees on the front of the web page.

Retail, office, industrial and institutional developments will be exempt from any impact fee for two years, and residential infill developments in downtown, mature and existing neighbourhoods will be exempt for three years.  Here is a very important point stated in a city of Winnipeg news release with respect to the above noted exemptions: “These exemptions will allow for additional time to determine if and how impact fees in these areas could be implemented.”

The approved council motion included the recommendation to set up

a working group comprised of elected officials, city administrative staff and industry and community stakeholders to

advise on the fee’s implementation over the three-year phase-in period.

“This group would provide for ongoing industry and community participation and input into future impact fee rates and their manner of application, input into projects from revenue generated from impact fees, and unique insights into any existing and changing market conditions,” according to a city press release.

Members of the Urban Development Institute and the Manitoba Home Builders’ Association are directing their legal counsel to clarify with the Manitoba courts about the city’s legal authority to impose a regulatory fee on new development.

“The fact is, we remain a city without a plan,” says Eric Vogan, president of the Urban Development Institute’s Manitoba Division. “This fee is not based on any measurable calculation of impacts from new residential development and is a tax. One that we believe the city does not have the authority to impose.”

WinnipegREALTORS® remains concerned about the impact of impact fees. The process to bring them in has been rushed without meaningful consultation with the stakeholders most affected by such fees.

On the positive side, we are encouraged that the city of Winnipeg is setting up an impact fee working group, which, among its assigned responsibilities, is to review market implications and identify emerging trends and provide advice to address fluctuations and trends in the relevant market areas.

WinnipegREALTORS® would willingly accept a position on this working group from both a residential and

commercial standpoint. Most important, it needs to be involved in reviewing market implications and the potential impact of impact fee rates. Why? It is the most relevant and connected organization

to resale real estate in Winnipeg through its MLS® and commercial property

information exchange.

It also has good exposure to  new

construction on its residential and commercial databases and a number of its members have a direct involvement in marketing new developments within Winnipeg.

As well, WinnipegREALTORS®encompasses the entire capital region, so it is able to see first-hand what changes

in MLS® market share sales activity is

occurring between the city and outlying rural municipalities.