Funding Growth in Winnipeg – Update #1

Every Saturday in August, I find a table at the St. Norbert Farmers’ Market and invite visitors to stop by and share their thoughts and ideas with me. As you can well imagine, each Saturday brings completely different topics of conversation and perspectives.  ‘Growth fees’ were the hot topic this past week.  Media have been covering the discussion on growth fees, so the conversation was very focused on Saturday morning!

There were many questions about what growth fees are, why we needed them, who pays, and how much – if anything – industry, residential and commercial developers should pay. Some people had already formed opinions on whether they supported growth fees as a type of development financing tool, and others had opinions on how much growth fees should be.

Many were surprised by the Developer Parameter Agreement and what developers must fund when building new residential developments (roads, wastewater sewers, storm retention basins, watermains, traffic control devices, etc.). The discussions also focused on additional development financing tools used to support growth in Winnipeg and other cities. Ie: local improvements, public private partnerships, density bonusing, specified area fees, and how these different tools were suited for different types of situations.

The questions asked and statements made by people helped me – yet again – to realize how knowledge of facts are not always the basis of people’s opinions and decisions.  The discussions inspired me to write a weekly blog, starting with this one, sharing my thoughts and perspectives on this conversation for the next few months.

Winnipeg is projected to grow by just over 1% per year for the next 25 years. Not the fastest growing city in Canada by any means, but we are projected to grow, which requires sound planning to maximize our resources and create a high standard living for all Winnipeggers.

As Councillor for the South Winnipeg–St Norbert Ward, where the City’s largest residential development (Waverley West) is growing at a rate faster than anticipated, the proper planning and finance tools available to fund this growth in a sustainable manner is a discussion that is more than timely!  Two years into my role as Councillor, both I and the residents of Waverley West have a clear understanding of the local growth issues facing this community:  lack of transit service, community centers, fire halls and maintenance.

From a City-wide perspective, I see these growth challenges in other new residential developments such as Sage Creek, Amber Trails and areas of Transcona. I fully expect if we don’t expand on the range of development financing tools, we will see the same challenges again when the new development of Ridgewood South fills in.

As Chair of the Standing Policy Committee on Infrastructure Renewal and Public Works, and as a member of the Mayor’s Executive Policy Committee, I also have a unique perspective on how prior Councils have planned and budgeted for sustainable City-wide growth. I’m very supportive of Mayor Bowman’s lead and Council’s support in having these conversations.

Our City is facing tremendous financial pressures.  If you have any time left for summer reading, I encourage you to read the current City of Winnipeg Community Trends & Performance Report. The information in this report facilitates discussion for the upcoming 2017 budget process.  If you don’t have time, then just read this Preamble for Appendix I (which should be the opening page in my opinion, vs being buried on Page 172?!!)

• This document was assembled to help explain and inform how the City of Winnipeg was able to carry out 14 years of property tax cuts and freezes between 1998 and 2011. This document will also outline some of the current financial challenges such as the operating budget’s structural deficit and the need for additional revenue sources.
• The current City funding model is unsustainable.
• The City is challenged by a growing structural operating deficit in the tax supported budget. Ongoing revenues are not enough to cover current expenditures levels. In the past, in order to keep City tax rates competitive and affordable, one-time revenue sources have been used to balance the tax-supported operating budget. For 2016, the operating budget shortfall is projected at $73 million.
• A new funding model is required.

Just to be clear, I am not saying growth fees or other development financing tools should be used to ‘fill the gap’ in the budget, but, the gap is there due to a variety of reasons. Poor planning for sustainable growth is a key reason.

In the 2016 Budget process, City Council approved funding to enable an informed discussion and a consulting firm was hired on May 27^th of this year.

• “The City is asking Hemson Consulting Ltd. to conduct industry consultation, provide an analysis of best practices across other municipalities, and an exploration of growth-related costs and revenues. Depending on the outcome of the study, the consultant will be requested to provide recommendations regarding financial mechanisms that would best serve in supporting growth management and implementation options.”

Internally, this initiative is being led by the City’s Finance Department with support from other departments.  Councillor John Orlikow, Chair of the Standing Policy Committee on Property Planning and Development, is the lead elected official on this file.

Presentations by Hemson Consulting were made to residential developers and can be viewed here: http://www.winnipeg.ca/finance/2016GrowthStudy.stm

Winnipeg’s City Council has not been briefed on these presentations at this point in time. I anticipate other consultations will be occurring with commercial and industrial developers before the final report. I am also anticipating a broad public consultation to occur when the report is released.

The results of just over two months of industry consultations, analysis of the Winnipeg market, and recommendations on how to handle growth related costs and revenues, and suggested growth financing tools will be presented to the City on August 31, 2016.   I’m not clear yet on when Councillors will be provided the report but expect when it goes public, it will be posted to the City’s financial website: http://www.winnipeg.ca/finance/2016GrowthStudy.stm

I support the concept that growth pays for growth, and property taxes are used to support renewal and maintenance of infrastructure. How this occurs in a fair and equitable manner, and in a way that enables a level of certainty for the development community, is what we must determine going forward. And we must ensure the tools we decide to use comply with all legislative requirements.

I’ll end with an excerpt from Our Winnipeg – A Sustainable Winnipeg:

• Piecemeal solutions tend to create opposing groups. How often have you heard the argument ‘If the environmentalists win, the economy will suffer,’ and its opposing view ‘If business has its way, the environment will be destroyed.’ Piecemeal solutions tend to focus on short-term benefits without monitoring long-term results.

I don’t expect this to be a short conversation, as any decisions made will have a lasting impact for years to come.   I strongly believe we need to take the time to carefully review all tools we can use to position our City for long-term sustainable growth.  And I strongly believe all stakeholders and the public should have the opportunity for meaningful discussions.

I’ll be at the St. Norbert Farmers’ Market again on Saturday, August 27 (8:30 a.m. to 9:30 a.m.) if you want to join me for a very frank conversation on funding growth in Winnipeg!  I will be also posting weekly updates on this topic.

Twitter link:  https://janicelukes.ca/?p=6710