Winnipeg needs development fees otherwise everyone will pay more, consultant says

Winnipeg needs growth fees in order to mitigate future tax increases, says a consultant hired by the city to determine whether new developments pay for themselves.

In a report posted on the city's corporate website on Thursday morning, consulting firm Hemson recommends the city apply charges against new developments.

"Currently it is self-evident that growth does not pay for growth since significant amounts of required infrastructure are not being built," Hemson concludes in its report.

"However, were the required infrastructure built, growth would only be paying a share of the cost. The city's tax rate would have to increase to account for the added cost and all ratepayers (not just new growth) would contribute. If the city were to have an infrastructure fee, the need for higher tax rates would be moderated by the amount such a fee would generate."

In a companion report, Hemson recommends a fee structure that would charge $109.45 for each square metre of a new residential development. This amounts to an $18,303 charge being levied on an 1,800-square-foot home. This is substantially lower than a fee schedule presented to developers on Aug. 18.

Members of city council spent slightly more than two hours asking Hemson officials about the reports. Following the briefing, Mayor Brian Bowman said he would like to read the documents in full before he comments on the recommendations.

Bowman, who announced his intention to bring in growth fees at his State of the City speech in February, nonetheless expressed satisfaction that Hemson concluded new developments create more costs than benefits to the city.

"The thing that I'm pleased to hear today is that it confirms what I've been saying, is that growth does not pay for growth," Bowman said outside council's temporary offices on the second floor of city hall's administration building.

The mayor said introduction of development fees will provide the city with the ability to grow in the future.

"That's a very challenging but a really useful exercise to go through to have these discussions," he said.

The mayor said he will now ask the public service to examine the report and provide recommendations about implementing growth fees. He said he would like to see those recommendations "as soon as possible" but would not place a timeframe on the report.

Bowman said city staff must examine whether some areas of the city, such as downtown and economically distressed neighbourhoods, could receive exemptions from growth fees. 

The blanket application of development charges would run contrary to city policy, the city's planning, property and development director told other senior city officials earlier this week in an email obtained by CBC Manitoba.

• Top planning official raises concerns about development-fee report

Bowman declined to speculate how much support he has on council for bringing in growth fees, aside from noting there will be differences of opinion. St. Vital Coun. Brian Mayes, for example, said he only supports development fees if they're applied across the city and do not single out newer neighbourhoods.

"I think I've been consistent in saying I would not support it if it was just on the suburbs. This does not blame the suburbs. It does not attribute all costs to the suburbs, so I think in some ways this helps clarify the debate a bit," Mayes said outside the council briefing room at city hall.

Over the past month, some of Mayes' colleagues on council as well as developers expressed concerns about the report. They've argued it's being rushed through the city hall and questioned Hemson's methodology. 

• ​Tension builds among developers over soon-to-be released Winnipeg growth-fee report​
• ​​Brian Bowman moving too fast on new Winnipeg growth fees, developers say​

Bowman said the city must consult with a range of Winnipeggers of various ideological persuasions before council considers moving forward with growth fees.

To date, consultation has been an issue. Colin Fast, spokesman for the Winnipeg Construction Association, said Hemson only consulted his industry once — and that took place last week, at his behest.

"The city acknowledged they dropped the ball and forgot to include our segment of the industry. And the consultant clearly said that nothing we brought up would change their report, since it was due in just a few days," Fast said in an email.

He said proposed fees for commercial and industrial developments — $96.66 per square metre — would be the highest in the country and may lead businesses to move outside the province.

True North Square alone, he estimated, would pay tens of millions in development fees.

Mike Moore of the Manitoba Home Builders Association was equally unimpressed by the study, which he described as substantially the same as a two drafts presented over the summer.

"They changed the numbers a bit, but it doesn't matter. As far as I'm concerned, it's a badly constructed fee and it's a tax," he said.

It's not clear how development fees would dovetail with existing city incentives for downtown residential development and heritage preservation, not to mention efforts by CentreVenture to promote downtown revitalization. 

The city is also in the midst of amending development agreement parameters. Council property chairman John Orlikow (River Heights-Fort Garry) said those discussions will overlap to some extent with development-fee consultations.

The question of whether the city has the legal ability to bring in development fees will also be addressed by the forthcoming report, said Bowman, adding he's been assured the city will not have to ask the province to amend legislation to allow the fees to proceed.

The Pallister government has been cool to this idea.