Winnipeg growth fees study shelved, advice ignored

A decade before Winnipeg City Council plowed ahead with a blanket growth-fee charge, a report obtained by the CBC warned the city to examine area-specific exemptions and discounts for industrial developments.

The administration of former mayor Sam Katz ordered and then promptly shelved the 2005 report by Hemson Consulting Ltd.

The report looks at various funding options the city could use to pay for infrastructure needed for new developments, including charging development fees.

The report recommended the city look at specific areas, such as downtown or industrial facilities, where an exemption or discount could encourage development. It states it was a "very common" practice in other municipalities to make such exemptions and discounts "to encourage development activity."

A 2016 report by the same consulting firm pointed out several municipalities, including Ottawa and Hamilton, offer exemptions or discounts for development on contaminated or "brownfield" sites, and for intensification in downtown neighbourhoods or near transit nodes. 

Within days of the release of the 2016 report, the public service recommended Mayor Brian Bowman's executive policy committee create a blanket growth fee for all areas. A development fee bylaw passed by council in October only gives exemptions to affordable housing projects.

Bowman couldn't recall whether he read the 2005 report, adding he "can't say I've read something that was drafted when I was in my early 30s."

"Council had asked for the most timely and up-to-date information. I certainly don't recall reading it myself. It may have been referenced in the most up-to-date report," he said Friday.

The 2005 report also recommended a phased-in approach to implementation, which will happen in Winnipeg; in October, the city announced a revamped, phased-in plan for the implementation of the controversial fee.

The revamped plan backs off the initial plan that would have imposed the fees starting in January. They will now be charged starting in May, with fees collected on new residential development in specific areas. After two years, the fees will also be applied to industrial, commercial, institutional and office developments. 

In three years, they will be applied to residential infill developments in older and mature neighbourhoods, as well as in downtown Winnipeg.

City officials have said during the phase-in period, staff and council will continue to explore possible continued exemptions.

Unclear why report shelved

The reasons why the 2005 report was shelved and never made public remain unclear, but Coun. Russ Wyatt (Transcona) told the CBC he believes it was shut down by the developer lobby behind closed doors.

The report was dated October 2005, a year before the 2006 municipal election.

"It is totally, 100 per cent a mystery as to why it didn't go ahead," said Jacqueline East, a senior member of the city's planning department in 2005.

East said the January 2005 approval of Waverley West — a subdivision of 13,000 homes to be built over 30 years in southwest Winnipeg — sparked the conversation about who should shoulder the costs.

Former mayor Sam Katz's executive policy committee gave the green light to commission the $50,000 report in March 2005.

"It became very apparent how much new infrastructure was going to cost," East said. "We had no way to budget and pay for this."

Official requests for the report from the CBC were denied by City of Winnipeg communications staff, who said it is a matter before the courts, a reference to the court challenge the development community has launched over the fees.

Eric Vogan, Qualico's vice-president of community development, said he remembers attending a large meeting in the city hall basement between developers and the administration around 2005. Maybe the report wound up being too complicated for the city to move ahead, he said.

Vogan, Manitoba Home Builders' Association president Mike Moore and the lawyers representing the Builders' and Urban Development Institute in their legal challenge have not seen the report — but not because they haven't tried.

The legal team has asked for a copy of the closely guarded report in its recent court filings.

"I think the mayor took a lot of shortcuts," Vogan said when asked whether he thought Bowman should have read the report.

'Very little discussion'

Councillors not on the executive policy committee in 2005, such as Fort Rouge-East Fort Garry Coun. Jenny Gerbasi and River Heights-Fort Garry Coun. Donald Benham, expressed surprise when they learned the report existed.

"Back in 2005, there was very little discussion surrounding growth fees, but I remember being very concerned about it," Gerbasi said.

Benham said there could be a correlation between the 2006 election and the decision not to discuss development fees.

Donations from developers were heavily relied upon by candidates, Benham said.

"Honest to God, council was owned lock, stock and barrel by the developers," said Benham, who held office from 2004-06.

While less technical than Hemson's 2016 report, the 2005 report would have paved the way for the city to begin examining options, said Jason Bevan, a consultant with the Toronto-based firm.

The earlier report doesn't definitively say Winnipeg will be able to implement a development charge without changes to the Winnipeg charter — a sticking point the development community will likely use in its current legal proceedings against the city.

Instead, it says the city "may be able to" implement the fees, but would need to undertake a comprehensive study to establish the appropriate amount to charge.

The 2016 report by Hemson, which includes estimates of how much the city should charge, could be considered such a study, Bevan said.

Expert calls for area-specific plans

David Gordon, director of the school of urban and regional planning at Queens's University, said area-specific charges are the best options for a city.

He pointed to the City of Ottawa, which has different development charges for inside and outside its greenbelt, because it is more expensive to build infrastructure farther from the city. 

"So when you take an average charge for an entire municipality, the areas where you already have efficient, compact development, which is easy to service, end up subsidizing the people who are requiring pipes be sent out to less efficient, low-density conditions," Gordon said.

"An average [charge] over the entire city is generally not a good idea."

But Moore said a universal approach would be the most fair, because it would ensure everyone is paying into the needed infrastructure upgrades, regardless of where developments are located.

However, on the flip side, a fee for infill developments might mean projects aren't feasible for developers, Moore said. 

"If the city truly wants to tackle our deficit throughout the city, it can't pick and choose certain neighbourhoods," he said. "The problem with that is that many projects will not be feasible with this fee, so you defeat your own process."