A Manitoba judge has ordered the City of Winnipeg to repay developers tens of millions of dollars after a three-year court battle over the legitimacy of impact fees.
Justice James Edmond sided with a group of developers and homebuilding advocates, stating although it is reasonable for the city to try and justify the fees with its charter, their arguments fall short.
“The bylaw and resolution imposes a constitutionally invalid indirect tax and is not saved as a valid user fee or regulatory charge,” wrote Edmond in his decision.
He ordered the city to refund all the impact fees plus interest it had acquired. The city has collected $29.7 million of impact fee revenue as of the end of 2019.
The impact fee came into effect in May 2017. It imposed a development cost charge of $54.73 per square metre of floor area, payable when the builder takes out a building or development permit. The fee applies to some new residential properties in the city.
The fees prompted legal action in 2017 by Ladco, the Urban Development Institute, the Manitoba Homebuilders’ Association, Ridgewood West Land Corp. and Sage Creek Development Corporation. Their complaints were heard together.
The groups argued that not only does the city’s charter not allow it to enact such a fee, but the bylaw is an indirect tax on Winnipeg homebuyers and its collection is discriminatory.
Mayor Brian Bowman had mixed feelings about the decision.
“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 recently. “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.”
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