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Kelowna councillor upset over high rents in buildings given tax incentives by the city

An artist's rendering of Cambridge House.
Image Credit: Contributed
September 14, 2016 - 4:30 PM

KELOWNA - A city councillor thinks Kelowna may have to look at restricting its rental housing incentives to non-profit housing projects and pushing out free market developers.

Coun. Ryan Donn is outraged at the amounts of the possible rents being advertised to potential investors for micro-suites in a building which recently received tax breaks from both the city and the provincial government for its construction.

“When a 330 square foot unit is being advertised as possibly fetching $1,400 to $1,600 per unit. I would call that almost predatory pricing and not what I intended as a councillor when I voted for the tax incentives,” Donn said. “Even in the crazy Kelowna market, that’s just too much and certainly doesn’t help our lack of affordable housing."

Donn concedes no rules have been broken — Cambridge House in downtown Kelowna received council approval to build 192 micro suites and received a grant-per-suite of approximately $970 per unit.

And there is nothing restricting what the owner of a new unit can charge for rent than the what the rental market itself will bear.

“Don’t get me wrong. I fully support the free market but when you get incentives, to me that changes it from purely market play to something where there’s a community expectation,” Donn said.

Kelowna council approved 329 new rental suites in 2015, most of which were micro-suites in three developments. (It has approved another 1,050 in 2016, largely conventional one- and two-bedroom rental units.) It's stated goal is to approve at least 300 purpose built rental units a year just to keep up with demand.

2015 was the first year that goal was met since the program began in 2012. Those suites are coming onto the market now and Donn says from what he can tell, rental rates in the new units are running from $750 to $1,000 a month.

Construction has yet to begin on Cambridge House, but Donn says if affordable housing is the goal, it may be time for council to restrict rental incentives to partnerships with local non-profit agencies and B.C. Housing.

"I know that's what I'm going to be thinking the next time one of these comes up before council," Donn said.

“There’s no way you can tell me that’s affordable and this was done under the auspices of affordable housing. There’s no way someone making minimum wage is going to be able to afford rent like that. This way we would get what we want, which is affordable housing,” Donn says.

Property manager James McCulloch with Kendall Property Management is “quite comfortable” with the potential rents he has advertised.

He derived them for a spreadsheet he gives to prospective investors and says it shows investors in the micro-suites will pretty much break even even with rents he’s suggesting.

“These owners are not in the business of subsidizing housing so why should they charge anything less,” he says.

McCulloch said he believes there will be big demand for the suites with the city’s current strong growth and the soon-to-be-opened Kelowna Community Health Centre and Okanagan Centre for Innovation bringing more workers downtown.

The micro suites went on sale Sept. 7 and range in price from $154,900 to $189,000 depending on which side of the building the unit is on.

In any case, McCulloch says the building will not be ready for occupancy until sometime in 2018 and that Donn is overreacting.

“There’s nothing set in stone. It’s hard to predict what the rental market will be like in 2018. We don’t know if Kelowna will still be hopping or if it will be like Calgary,” he adds.

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News from © InfoTel News Ltd, 2016
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