Growth Study for the City of Winnipeg

housing starts

The City of Winnipeg is in the process of examining how growth and new developments impact the City’s existing infrastructure and civic services.

My thanks to the Winnipeg Free Press for covering this important story.


 

City seeks study on infrastructure costs from growth

Mayor eyes fees on new developments

Bowman told reporters Wednesday morning that the growing infrastructure deficit is evidence that new development isn’t paying its share of the costs associated with the growth that comes with new development.

“The numbers that I’ve seen don’t support the proposition that growth is paying for growth,” Bowman said. “You look at our infrastructure, you look at the structural operating deficit – the numbers don’t add up.”

The city has issued a request for proposals for a consultant to prepare a report examining how growth impacts the city’s existing infrastructure. Council set aside $250,000 in this year’s budget for the work. The final report is due August 31.

Bowman said a consultant’s work is necessary to gather all the data for a proper discussion on the issue adding however, he’s satisfied he already knows the answer to the question.

“As we grow, we have to ensure the increase in corresponding wear and tear on the connectivity between communities and the infrastructure that connects the city, the funds are there for that growth,” Bowman said.

Bowman said he wants to have the possibility of a new fee considered for the 2017 budget but said the final decision will be up to council.

Bowman’s proposal was immediately rejected by the development and home building industry.

“Growth not only pays its fair share, growth pays more than its fair share,” said Mike Moore, president of the Manitoba Home Builders Association, adding the industry is prepared to show Bowman’s assumption is wrong.

The new provincial government didn’t seem receptive to the plan either. Following a swearing-in ceremony at the Legislature Wednesday afternoon, Premier Brian Pallister said he’s not prepared to allow city hall to impose new taxes, whatever they are called.

“I would have no plans to approach changes in legislation that would, as a consequence, increase the tax load of an already over-taxed population,” Pallister, adding however he’s not certain if the city could create the new fee without provincial approval.

Bowman’s call for “regulatory growth fees” is similar to a pitch made by former mayor Sam Katz and the administration in the fall of 2013 – that the city needed to impose an additional fee on suburban development to pay for the strain that growth was placing on the city’s infrastructure.

The city already imposes development charges on the development industry for costs related to the specific projects – sewers, sidewalks, roads, parks – but those charges cannot be applied to services outside the project area.

In 2013, Katz and the administration believed it could raise an additional $30 million per year through new growth charges on suburban development – a fee of $10,000-$12,000 per new lot.

The Selinger government refused to consider the proposal in 2013 and it’s questionable whether the new Pallister government will have a different view. Pallister said during the provincial election campaign that he would not support giving any new taxing powers to municipalities. Newly elected MLA Scott Fielding is a key player on Pallister’s cabinet but when he was a city councillor and member of Katz’s inner circle he was a staunch opponent of the development fee in 2013, calling it a tax on new homes the city couldn’t afford.

But Bowman appears to be taking Katz’s idea one step further – applying growth charges to infill developments as well as suburbs.

Bowman said that the city’s planning guide, OurWinnipeg, encourages greater density development but he said no one at city hall knows what impact infill projects have on existing infrastructure.

“Regulatory growth fees could be used for growth regardless of where it occurs…you want to make sure growth is paying for growth.”

Echoing comments he made in the spring at his state of the city address to the Winnipeg Chamber of Commerce, Bowman said without new fees, all Winnipeg property owners will have to see higher property taxes.

“Given the financial position of the city, we’re either looking at higher property taxes for everyone or higher property values and costs for some who choose to build.”

Moore said he expects the development and home building industries will be consulted by the consultant the city hires.

Moore said the city needs to determine how and who pays for existing infrastructure. New suburban homeowners are paying property taxes for relatively limited services, he said, adding that money is going to subsidize infrastructure across the city.

Bowman said his “regulatory growth fees” are different than what Katz and the administration was proposing in 2013 but he was unable to explain the difference.

In 2013, city officials said it couldn’t impose new development charges to pay for growth outside the project areas without legislative amendments to the City of Winnipeg Charter Act but Bowman said he doesn’t think the city needs the province’s approval. He added he hoped the new Pallister government would be amenable to allowing the new fees if the evidence from the consultant’s report supports his position.

“One of the things I’d expect from our new provincial partners is that they want to ensure a stronger Winnipeg, a Winnipeg that has its financial house in order.”

A civic spokesman said the consultant report will “provide an analysis of best practices across other municipalities, an exploration of growth-related costs and revenues, and depending on the outcome of the study….determine whether the potential exists to create a new financial mechanism and to make recommendations toward implementation.”

Bowman said he planned to share the findings from the consultant’s report with all of council and the public.

“This isn’t just intended for councillors and certainly not intended for councillors behind closed doors. This is so Winnipeg can have a meaningful discussion and debate on this potential and do it with accurate information.”

 

What they said

Brian Bowman, May 11, 2016:  “The numbers that I’ve seen don’t support the proposition that growth is paying for growth. You look at our infrastructure, you look at the structural operating deficit – the numbers don’t add up.”

Sam Katz, Nov. 6, 2013:  “If you live in a mature neighbourhood….should you be subsidizing growth in other parts of the city? Because that’s what this is all about – having growth pay for growth.”

 

The costs of growth

City hall is looking for a consultant to examine how growth impacts city services.

RFP No. 434-2016: Request For Proposal For A Consultant to Prepare A Growth Study For The City of Winnipeg:  “The City of Winnipeg has gone through a period of growth that has impacted the City’s operating and capital costs and revenues. The City of Winnipeg is looking to determine the relationship between growth-related costs and revenues. Dependent upon the results of the study, there may be an opportunity to create a new, innovative financial mechanism to support growth management objectives, and facilitate the form and type of development that Council encourages through its policy statements. If warranted, the design of a new approach should bridge the existing policy framework and implementation. This would assist in moving the City toward achievement of Complete Communities, a part of Our Winnipeg.”

 

aldo.santin@freepress.mb.ca    Read more by Aldo Santin.

 


A new look at city taxes

Pallister may need other options than growth fees

 

Let there be no doubt Premier Brian Pallister is going to govern differently than his predecessors.

It is early days, but Pallister’s emphasis on soft austerity, tax cuts, and pro-business hyperbole contrasts starkly with the politics, policies, and hyperbole of the former NDP government. And yet, there are areas where the two regimes are in lockstep.

 

Such as new sources of revenue for the City of Winnipeg. NDP premiers regularly dismissed requests from successive mayors for amendments to the City of Winnipeg Act to create new revenue streams. To date, Pallister is honouring that tradition.

This week, Winnipeg Mayor Brian Bowman announced a $250,000 study on growth development charges (GDC), additional fees applied to new residential and non-residential projects used to pay for the full impact of new development on infrastructure and other civic services. Developers already pay the majority of the costs of related infrastructure; GDCs would dramatically expand the range of services they would be asked to cover.

If the study shows property taxes from new suburban development do not pay for the total impact on civic services and infrastructure — and there is every indication it will — Bowman has said GDCs could be introduced in the 2017 budget year.

However, there is a wild card at play. It is not clear whether Winnipeg has the authority to levy such fees on its own. Normally, fiscal measures are subject to the provisions of the City of Winnipeg Act, a provincial law. As such, any new measure (such as this fee) could theoretically require an amendment — although Bowman has a civic legal opinion indicating a GDC could be implemented without going cap in hand to the province. That is a good thing because Pallister is not very supportive.

When asked Wednesday for a comment, Pallister echoed, word for word, his predecessors: “I would have no plans to approach changes in legislation that would, as a consequence, increase the tax load of an already overtaxed population.”

The province has been reluctant to make legislative changes to allow any municipality to create new revenue streams; it is difficult to ask provincial politicians to share some of the blowback from a decision made by municipal politicians.

And yet, there is an issue of fairness here. GDCs are already widely employed by smaller municipalities covered by the Municipal Act. That means bedroom communities surrounding the capital city — a major source of wear and tear on civic services and infrastructure — charge developers tens of thousands of additional dollars more than developers in Winnipeg.

Unlike property taxes, GDCs try to ensure existing property owners are not paying, over the long-term, an additional burden to support new development. The Winnipeg homebuilding industry strenuously disputes the notion that new development does not pay for itself through property taxes, but in the rest of the country, it has been conclusively proven growth does not pay the full cost of growth.

That is a major reason why GDCs are already the norm in other provinces. According to information gathered by the city, GDC fees range from a high of $81,000 per single-family dwelling in Brampton, Ont., to $12,200 in Edmonton.

In cities such as Toronto, for example, GDCs are levied to support 17 different budget items, including infrastructure of all description (water and waste, roads, bridges) along with rapid transit, social housing and services, libraries and recreational services, child-care and municipal health services. It adds up to nearly $33,000 per new detached and semi-detached residential unit and $24,000 for each condominium or apartment unit. In the fiscal year 2015, Toronto collected more than $500 million in development charges. Although developers are hardly thrilled, it’s difficult to find many now who argue they are unjustified.

How would GDCs impact Winnipeg? With roughly 4,000 housing starts per year, Winnipeg could easily reap tens of millions of dollars from growth-related development fees. The city estimated in 2013 that with a per-unit fee of $12,000, it could generate $30 million, an amount roughly equal to a six per cent property tax increase.

When a specific proposal comes forward, as it likely will later this year, the new premier should keep several important points in mind as he considers his response.

First, Pallister should remember Winnipeg’s fiscal stability is under siege. The current budget is held together with a tenuous and unsustainable combination of property tax and fee increases, reserve-account raids, intense vacancy management, and cutbacks in services. It is not an exaggeration to say new revenue sources are desperately needed.

Pallister should also remember citizens do not believe tax or fee increases are, in and of themselves, evil if they are empirically justified, fairly applied, and support worthy things. He might recall that in promising to eliminate the one-point increase in the PST to fund infrastructure, he was running against public opinion; election polls showed a majority of Winnipeggers supported the measure.

Finally, Pallister should remember that to help pave the way for the cut to the PST, he has already pledged to cap total infrastructure spending at levels significantly below what the NDP promised to spend. After giving municipalities less, he must keep an open mind about revenue proposals that would shift some of the tax burden from all property owners to new development.

Pallister may believe he has the mandate to lower taxes, but it would be wrong to argue he also has the mandate to restrain Winnipeg city council, a similarly duly elected body, from pursuing new streams of revenue at a time when it is clear property taxes alone are not going to do the job.

Pallister wants to differentiate the new Tory government from its predecessors. Keeping an open mind would be one of the best ways of doing just that.

dan.lett@freepress.mb.ca   Read more by Dan Lett 

 

 

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