A development company that was seeking $1.6 million from a group of residents in Winnipeg's Old Kildonan neighbourhood to help pay for new roads, sewers and sidewalks they don't want has dropped its request.

Genstar Development Company owns land on the north side of Templeton where a new development called Amber Gates is being built and is in need of new infrastructure such as roads and sewer and water lines.

"I think we've gone from great shock from the end of September of 2016 to absolute elation today hearing the news today that Genstar chose to pull out," said resident Cherry Karpyshin.

A group of 11 homeowners across the street from the development received bills that ranged, based on property frontage, between $76,000 and $361,000. Notices came in September and the residents were set to oppose the fees Monday evening.

Devi Sharma

Devi Sharma, the city councillor who represents Old Kildonan, says she is very pleased the developer decided not to pursue the fees. (CBC)

A city bylaw allows developers to apply to recover costs of local improvements such as building roads, sewers and sidewalks by seeking a cost-sharing arrangement with residents who would benefit from them.

On Monday, Devi Sharma, the city councillor who represents Old Kildonan, told CBC News that Genstar had withdrawn its application for the local improvement fee from a scheduled community committee meeting. The developer decided not to go ahead with the request for a local cost-sharing agreement.

"I am extremely pleased that the developer Genstar decided to withdraw for the ask for the local improvement bylaw," Sharma said just prior to the meeting.

Sharma said that the city will only collect money for the developer if residents on the south side subdivide their own land at a later date.

The city councillor called that a "much better plan" that would protect residents wishing to stay on their current property in its current form.

In an emailed statement to CBC Genstar said rules and procedures were followed, but the company decided to pursue other recovery methods "which include recouping attributable improvement costs at the time of future development, should it occur, from these and other benefiting lands."

Cherry Karpyshin

Cherry Karpyshin and another resident hug after learning that that Genstar had withdrawn its application for the local improvement fee from a scheduled community meeting on Monday. (CBC)

The room erupted in applause at the community meeting when the announcement was made. 

"We were elated. I can't tell you, the phone was ringing down the street. We were so excited to hear the great news," Karpyshin said. "It was overwhelming."

While the fees could come back if the land is subdivided, Karpyshin said the pause means she and her neighbours have time to think about long-term plans for their property. 

"We understand that but then, like Genstar, we could sell our lots and we could generate revenue to pay for those improvements. This time we had no way of generating income," she said. 

"We are prepared for that."