A five per cent increase to Winnipeg's controversial growth fee also known as an impact fee surprised the development industry, according to the Manitoba Home Builders’ Association.

MHBA President and CEO Lanny McInnes said the group only noticed the spike, which took effect Jan.1, 2018, late last week when notified by members who received their permit fees for January.

“It was a bit surprising that they not only increased on Jan. 1 but increased it by the maximum amount,” said McInnes. "This is a tax that's paid for by the homeowner who's building a new home.”

“We looked for confirmation in terms of publicly posted information and we couldn’t find any so we did contact the city directly and ask for confirmation which they did provide us this week and as a result we were able to inform our members.”

A city of Winnipeg spokesperson said an Oct. 26, 2016 council decision states: "that the fee amounts increase on Jan. 1 of each year by the rate of construction inflation for the previous year as determined by the Chief Financial Officer, and that the annual increase be capped at 5% per year"

The fee applies to residential development in new and emerging neighbourhoods in order to help pay for the cost of new infrastructure, according to the city of Winnipeg's impact fee website.

The rate initially set at $54.73 per square metre has been increased to $57.47 per square metre.

McInnes said builders want more information from the city about the factors leading to the five per cent hike, the maximum allowed.

“We still haven’t found any information on how they based that fee increase, what the rational, justification for it is and we’ve asked the city for that and their response is we’re looking into it.”

City Councillor John Orlikow, chairperson of the Standing Policy Committee on Property and Development, said the city will make more information available to builders and developers about how they arrived at 5 per cent.

“I don’t know why they’re surprised,” said Orlikow. “I believe everybody knew it was coming, maybe not the percentage amount, but they all knew.”

“Nothing to hide. We’ll lay it out for them. They can see it.”

A court challenge has been filed by Winnipeg’s development industry on the grounds that the city doesn’t have the authority to collect the fee.

Since the fee was implemented on May 1, 2017 the city has collected $5.8 million.

The money collected is being held in the Impact Fee Reserve Fund.