WINNIPEG -- The City of Winnipeg has suspended the collection of impact fees following a court decision Wednesday that ordered the refund of the controversial charge.

Michael Jack, the city’s chief corporate services officer, along with Winnipeg Mayor Brian Bowman said as of Thursday morning, the city decided to suspend the collection of the impact fees in good faith, as they work with home builders and developers to figure out next steps.

Jack did not say how long the suspension of impact fees collection will last.

On Wednesday, the Manitoba Court of Queen’s Bench ordered the City of Winnipeg to refund fees collected to developers and builders. In his decision, Justice James Edmond wrote the bylaw and resolution regarding the impact fees "imposes a constitutionally invalid indirect tax and is not saved as a valid user fee or regulatory charge."

"While we are disappointed with the ultimate result, or the ultimate outcome – the court made some very key findings and key conclusions that were positive with respect to the city's position in this," Jack said.

"Nonetheless, we need to take time right now to review the decision. This is, of course, is a significant matter for all parties, and so we need to determine what the most appropriate next steps are going to be."

Jack said it is a bit early to discuss the refund of collected impact fees, saying both parties have to review the decision, which then has to be signed as an order.

The fees, which were first introduced in 2017, imposed a development charge on developers and builders of $54.73 per square metre of floor area.

Bowman pushed for the fees, arguing the new communities were not covering the costs of related infrastructure and services.

"I've been arguing, as others have, that growth has not been paying for the cost of growth," Bowman said on Thursday, arguing the city is being treated unfairly.

"When you compare the City of Winnipeg to the capital region and the rules that provide to ensure that the cost of growth are paid for by those incurring that cost – there is one set of rules for Winnipeg, and there are another set of rules for all of the capital region partners."

The city has collected $29.7 million of impact fee revenue as of the end of 2019.

The Manitoba Home Builders' Association, along with several other development companies, questioned if the city had the legal authority to impose impact fees.

Bowman said while the decision is disappointing – it did provide some clarity.

"I am very pleased that the court has stated that imposing an impact fee is lawful," he said. "Secondly, I was very pleased to see the court affirm that growth in the city is not paying for growth."

Bowman said the city will now work with all the parties involved to fully review the decision.

-with files from CTV’s Jeff Keele.