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City of Winnipeg loses court battle over impact fees, ordered to pay back millions

The City of Winnipeg has lost a court battle over growth fees and have been ordered to repay millions collected over the last few years.
The City of Winnipeg has lost a court battle over growth fees and have been ordered to repay millions collected over the last few years. Global News

The City of Winnipeg has lost a key court battle over impact fees, and the ruling leaves the city on the hook to repay millions of dollars collected over the last few years.

In a decision Wednesday, a Manitoba Court of Queen’s Bench judge ruled the city will have to pay back more than $30 million in fees charged to home builders and homeowners, after siding with arguments made by the Manitoba Home Builders’ Association and the Urban Development Institute.

Read more: Winnipeg’s controversial growth fees kick in

The city began collecting impact fees, also known as growth fees, on new build homes and developments in certain areas in May 2017 — several months after the lawsuit challenging the city’s authority to collect the money began.

The move followed a council decision the previous fall to start charging $500 per 100 square feet of new residential space in selected areas at the fringes of the city.

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Growth fees passed at City Hall
Growth fees passed at City Hall

The revenue was meant to pay for infrastructure like schools and fire halls as the city continued increasing in size.

But because of the court challenge, the money was kept in reserve until the legal battle could be resolved.

‘Invalid indirect tax’

In their legal challenge the Manitoba Home Builders’ Association and the Urban Development Institute argued the city didn’t have the authority under its charter to create the growth fee bylaw and that the fee unfairly levies a tax on home buyers.

In his decision Justice James Edmond said while the city does have authority under its charter to impose the fees, the bylaw “imposes a constitutionally invalid indirect tax and is not saved as a valid user fee or regulatory charge.

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“The imposition of the Impact Fee … treats developers, builders and homeowners within certain developments differently,” wrote Edmond in his decision.

Growth fees could cause resale home prices to soar: analyst
Growth fees could cause resale home prices to soar: analyst

The city can still appeal the decision.

Mike Moore, the former president of the Manitoba Home Builders’ Association who was at the organization’s helm when the suit was filed, said industry is willing to work with the municipality.

Read more: Legal challenge over Winnipeg’s growth fees no closer to resolution

“The whole purpose was really to seek clarity regarding the City of Winnipeg’s authority to implement this fee, and I think today’s decision provides that clarity,” Moore told 680 CJOB.

“The development industry is ready to work with the city to create a plan for growth that works for everybody.”

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Winnipeg Mayor Brian Bowman declined to comment on the decision Wednesday.

— With files from Diana Foxall

City of Winnipeg increases impact fees by 5 per cent
City of Winnipeg increases impact fees by 5 per cent