It’s been an ongoing battle between Winnipeg city council and developers but the new — and controversial — impact fee officially kicked in Monday.
The impact fee, better known as a growth fee, means developers pay more to build new homes in certain areas of the city.
“There are nine different areas that have been highlighted that are subject to the impact fee,” said Mike Moore from the Manitoba Home Builders’ Association. “That means every area that is not on there is not subject to it… yet.”
In October, city council voted to charge $500 per 100 square feet of new residential space in selected areas at the fringes of the city, starting May 1.
READ MORE: Growth fees passed at City Hall
According to the by-law during the first phase of implementation, the impact fee only applies to new residential construction or existing buildings being converted to residential uses in “new communities and emerging communities” identified on the city’s website.
This includes areas like Sage Creek and Bridgwater Forest but not necessarily the communities across the street.
“One side of the street would be subject (to the growth fee) and the other side would not,” said Moore.
In some cases the difference is who was able to secure a building permit ahead of the April 30 deadline.
“If a (permit) was submitted before, it would not be subject to the fee. If you handed in that same permit today, it would have a fee,” said Moore.
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However, it’s not just new homes but also multi-unit buildings.
Vic Janzen and the Burnett Management Company have a new rental property going up in Sage Creek.
They just got their permit ahead of the deadline.
“This is a 55+ rental project. 102 units with underground parking,” said Janzen. “Margins on a project like this are extremely thin. The tax on this would have been in the range of $700,000. That would have made quite a difference to the bottom line and a difference to rental rates that we would have to charge.”
Janzen said they will now take some time out to see if future projects would still be feasible.
“It would absolutely mean higher rent,” he said. “It might mean less quality. You may have to cut corners to reallocate those dollars somewhere else. At the end of day, it would fall on the residents.”
Moore and the Manitoba Home Builders’ Association, have been at the forefront of the fight against the fee.
RELATED: Prospective growth fees causes concern for new homebuyers
According to Moore, it could add up to $10,000 more in costs for a new home in those areas.
Developers who were able to get permits in ahead of the midnight deadline will be exempt.
The city has said it intends to use the revenue to pay for growth-related infrastructure.
Residential building permits
A list of the number of residential building permits issued in the city from August 2015 – March 2017.
August 2016 – 866
August 2015 – 553
September 2016 – 576
September 2015 – 733
October 2016 – 623
October 2015 – 655
November 2016 – 482
November 2015 – 458
December 2016 – 395
December 2015 – 374
January 2017 – 546
January 2016 – 350
February 2017 – 383
February 2016 – 433
March 2017 – 510
March 2016 – 511
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