Winnipeg home builders and residential developers won a major court victory this July as the City of Winnipeg was ordered to repay millions of dollars in “impact fees” to residential developers.
The legal battle was launched in 2017 when the Manitoba Home Builders’ Association and the Urban Development Institute, Manitoba Chapter, filed affidavits with the Manitoba Court of Queen’s Bench for the review of the city’s impact fee by-law. The impact fees amounted to roughly $5,000 for every 1,000 square feet of new residential development.
Developers Ladco Company Ltd., Ridgewood West Land Corp. Sage Creek Development Corp. and Qualico were also involved in challenging the fees.
The builders argued that the fees were invalid on the grounds that the City of Winnipeg Charter did not provide the city the authority to enact it. The application also stated the by-law was an indirect tax on Winnipeg homebuyers and that it was discriminatory in its collection of the impact fee.
The court has agreed.
Court of Queen's Bench Justice James Edmond stated in his July 8 decision: “The bylaw and resolution imposes a constitutionally invalid indirect tax and is not saved as a valid user fee or regulatory charge.” In his 119-page decision, Edwards added that the impact system lacked "any definite or clear requirement that the monies collected be tied back to growth caused by the developments from which the monies are collected.”
Edmond ordered the city to refund all the impact fees plus interest it had acquired. The city had collected $29.7 million in impact fees 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 (about $5 per square feet), payable when the builder takes out a building or development permit. The fee applied to most new home building in the city.