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June 11, 2018 - 4:07 PM
KELOWNA - In a continuing bid to encourage construction of rental housing, staff are recommending changes to the city’s rental grant and tax incentive programs, sharpening the criteria and restricting the grants to non-profit societies.
While the final decision is council’s, long range policy planning manager James Moore said planners are recommending the amount of money made available through the rental grant program be increased but that eligibility be restricted to non-profit organizations that provide affordable rental housing.
The tax incentive program would also be expanded, but restricted to certain geographic areas, Moore said. The overall target number of rental units will also be increased.
The city gave grants to some 1,000 units for 2017 although the majority of them were market rental projects that charged market rates.
“We haven’t seen as much investment in affordable rental housing side, the majority has been going to market rental projects,” Moore said.
Moore wouldn’t release the recommended numbers until Kelowna councillors get a chance to see them June 21 but Kelowna in 2017 and 2018 spent $420,000 on the annual rental grant program, which is used to offset development cost charges.
The money comes from two sources: $120,000 came from the development cost charge offset fund while another $200,000 to $300,000 came from the housing opportunity reserve fund.
The new format would see the DCC offset fund increased to cover the entire cost of offset grants and the housing opportunity fund increased but used for strategic land acquisition for future housing projects.
Revitalization tax exemptions excuse a developer from paying the municipal portion of property taxes on improvements, such as a new building, although the land is still taxed. The agreements last for a minimum of ten years and require the repayment of the grant if the project is ever converted to market condominiums.
Moore said staff will also be recommending a new annual target of purpose-built rental housing, up from the 300 a year target that has been guiding policy since 2012.
The vacancy rate in Kelowna for purpose built rental housing remains at a dismal 0.2 per cent, as calculated by the Canada Mortgage and Housing Corporation, although Moore predicts some relief.
"We will definitely see some improvements in the vacancy rate in the next year," Moore predicts. "We also want to see continued investment in rental housing to avoid this functional zero vacancy rate we've been living with."
Kelowna has given out rental housing grants worth just over $1 million to a mix of 14 purpose-built rental projects since 2015 as offsets to development cost charges.
One of the largest is a 260-unit project at 1459 KLO Rd. Mission Flats received $119,600 rental housing grant in 2017 against development cost charges of $4,026,000.
The developer will also begin in 2019 a revitalization tax exemption agreement estimated at $209,000 annually.
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