Despite a legal decision that saw the city ordered to refund more than $30 million collected through impact fees from homebuyers and developers in Winnipeg’s expanding suburbs, Mayor Brian Bowman says he’s pleased about legal precedents set by the court.
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 homebuyers — that suit was launched in 2017.
Manitoba Court of Queen’s Bench Justice James Edmond ruled Wednesday that although the city has the 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.”
“We now have a judicial decision which confirms that imposing an impact fee is lawful and in fact growth in the city is not paying for growth,” Bowman told reporters Thursday, adding that the decision will provide relief for homeowners who feel like they’re subsidizing Winnipeg’s suburban growth.
“In the court’s technical reading of the bylaw itself, while lawful, was that it was overly broad in how fees could be invested and that obviously is disappointing news.”
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.
Read more: Winnipeg’s controversial growth fees kick in
The revenue was meant to pay for infrastructure like schools and fire halls as the city continued increasing in size without substantially growing the tax base.
But because of the court challenge, the money was kept in reserve until the legal battle was resolved.
The cash will remain in reserve for now, while the city reviews the legal decision and decides on its next steps, said the city’s chief corporate services officer Michael Jack on Thursday — although the city immediately stopped collecting the fee following the decision.
However, Jack said, it would be premature to discuss refunds.