City grants rental developers $500K
Jan 22, 2013 / 5:00 am
The City of Kelowna, through its Rental Housing Grant program, has distributed more than $500,000 to developers of rental housing projects in the city.
Community Planning Manager, Theresa Eichler, told council Monday the $504,601 was divided among four developers and 94 total rental units ($5,368 per unit).
The grants break down as follows:
- 64 units on Brookside Avenue - $365,030
- 16 units on Sutherland Avenue - $85,889
- 9 units on Sylvania Crescent - $48,313
- 1 unit on Pandosy Street - $5,368
Eichler says the biggest deterrent to construction of rental properties is a low return on investment. She says it can take up to 10 years for a property to show a return and then, it is 'only slight.'
She says developers have asked the city to defer Development Cost Charges (DDC's) as an incentive for building rental properties.
"The city cannot defer DDC's by the legislation we work under so the grants were thought of as a way to try and get close to that without actually doing something we can't do," Eichler told council.
"The maximum amount of any grant cannot exceed the amount of the DCC. If we have enough money in a given year it could come to that level."
In 2012, Eichler says only one grant application was brought forward for six units. In that case she says the full amount of the DDC's were covered.
Eichler says because of the financing involved, rental housing is probably the key gap in the housing supply nationwide.
About 30 per cent (14,000) of all homes in Kelowna are rented.
She says renting is expected to increase in popularity with some forecasting that a 45 per cent rental rate is a healthy supply reflecting a healthy economy and a good labour force base.
Over the past 10 years the rental vacancy rate was about 1.7 per cent, however, that increased slightly a year ago with new supplies coming on stream.
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