Winnipeg punishes developers in new budget, writes Jordan Sodomsky

Mayor Brian Bowman, who campaigned on the basis of sustainable infrastructure and a commitment to improving the infrastructure deficit, has targeted the single most integral group to the cause, writes Jordan Sodomsky, developer and the Principal of Riverside Consulting.
An artist rendering of True North Square. Jordan Sodomsky says the city is offering tax incentives to big projects in downtown Winnipeg but not to infill developers in other parts of Winnipeg, also in need of density and revitalization. (True North Sports and Entertainment)

If citizens were looking for clues to the city administration's broader mandate, they wouldn't have to look much further than the 2016 proposed operating budget.

Despite months of campaign rhetoric regarding the need for sustainable infrastructure as the first step towards a kinder, gentler city, the opposite is actually happening.

The city is moving away from the promotion of infill development, a key plank in Mayor Brian Bowman's election campaign.

The city's charter obliges it to formulate an annual budget wherein expected expenditures do not exceed expected revenues. This can be a tricky exercise when, by necessity, managing the optics and semantics of a property tax hike becomes the primary objective of the budgeting process.

It's absolutely true difficult choices have to be made. And it's easy to fall victim to choices that will be politically palatable or at least less dangerous than risky decisions. It's exceptionally harmful, however, when short-term thinking leads to the sort of unintended consequences our city simply can't withstand.

Developers and cities have always had a symbiotic relationship. We depend upon them to provide clear, concise guidelines and regulations, and they depend upon us to grow their single most important revenue source—the property tax base.

Much has been made of the cozy relationship between developers and city administrators but, by and large, the administration does an excellent job of protecting the city's interests while keeping an eye towards their most important funding mechanism.

For perspective, the City of Winnipeg's property tax base is projected to contribute $549.3 million in revenue to the city's 2016 budget, a whopping 345 per cent more than the second greatest contributor — the provincial and federal governments.

It also helps to remember not all property tax dollars are equal. Property taxes are levied as a means to cover the significant costs of building, maintaining, and administering a city. And it is a fairly well understood principal that, like anything, the efficiency of a city contributes to the health of its bottom line.

For a city, density is an effective and relatable proxy for efficiency. The more revenue we can generate per square foot of land, the fewer total costs we ultimately incur. Which is what makes this budget so curious.

As a tax base, the redevelopment of infill lands are our best investment. The very act takes already serviced lands and increases the taxable benefit to the city while providing much-needed housing and an increase to the density of existing neighbourhoods.

In response to this, the city has almost specifically targeted infill development as low-hanging fruit in an attempt to fund its other priorities.

A mayor who campaigned on the basis of sustainable infrastructure and a commitment to improving the infrastructure deficit has targeted the single most integral group to the cause.

Simple subdivisions involving the redrawing of a lot line in order to create two lots from one have increased 479 per cent to $3,450. Rezoning a single-family lot to allow the construction of a duplex has increased 658 per cent to $11,250. Fees to merge and rezone two lots in a neighbourhood like Osborne Village to build a small multi-family complex have increased 720 per cent to $12,375.

Rather than making infill development easier, the city is effectively making it more difficult.

Slightly more curious in all this is the city has gone quite far afield to justify its commitments to projects like True North Square through grants and other tax-abatement mechanisms under the auspice that infill density is a cause worth funding.

It's unfortunate that only cleverly drawn boundaries in seemingly arbitrary sections of the city's most mature neighbourhoods are given the treatment that should be extended to all infill development. Many other jurisdictions have provided for the development of infill property as a right, making the process easier and less costly, not more so.

We need to focus our attention on creating hospitable conditions to foster the sorts of results Bowman campaigned on and promised to deliver.

The results of the new fee schedule will render only the most well-heeled capable of withstanding the significant risks inherent in real estate development.

The truth is that the vast majority of community building is done at a granular level and rarely because of much-hyped mega-projects. We simply can't afford to lose that if our communities are to thrive.

Jordan Sodomsky is a developer and the principal of Riverside Consulting.


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