Developer incentives
Development Incentives
We have several incentives available to developers to encourage alignment with the City’s strategic priorities for urban development. Grants, tax incentives and density bonusing are available to promote the development of purpose-built rental, non-profit, and co-operative housing, as well as commercial development in certain areas of the City.
We offer incentives for development in strategic ways to ensure that the type and location of new development achieve our long-term and overall community objectives. For example, our Development Cost Charges are structured to reflect the larger infrastructure burden of development outside of Kelowna's core. That structure acts as an incentive for development within the core area of Kelowna.
To encourage rental housing in Kelowna, we have two incentive programs in place: a rental housing grants program and a revitalization tax exemption (RTE) program.
The RTE program provides tax exemptions for purpose-built rental housing, non-profit rental housing, and cooperative housing within the permanent growth boundary, as well as for commercial and mixed-use development within Tax Areas 1 and 2 in the Downtown City Centre, and within Tax Area 3 in the Rutland Urban Centre. Eligible projects can receive a tax exemption on the municipal portion of property tax attributable to the increase in property value resulting from development of a property for 10 years.
You should submit your application after you have submitted a complete development permit application, and your project has established some timelines for construction and occupancy. If a rezoning application is also involved, it should have progressed to 3rd reading before making an application.
*IMPORTANT* Please note that purpose-built rental and non-profit rental housing projects must have the rental only subzone and must submit an application before a Building Permit has been issued. You must demonstrate extenuating circumstances and receive Council approval for any applications received after a Building Permit has been issued. Once a building has received occupancy, you are no longer eligible for the Revitalization Tax Exemption.
Follow the RTE Checklist to ensure you have a full and complete application. Once you have a complete application, bring your application (including a USB) to One Window at City Hall. Your application will be assigned to a Planner, and they will review the application and provide you with the next steps.
Generally, the tax exemption will begin the year after the project is constructed, and occupancy has occurred. However, BC Assessment has a September deadline for new buildings to be assessed. For example, a project that completes construction in December 2025 will have missed BC Assessment’s deadline for new projects. Therefore, the building will be assessed in 2026 and the 10-year exemption will start in 2027.
The documents below must be submitted with the application:
- RTE Application Checklist (must submit with application)
- Application form
- Owners Authorization Form
The Revitalization Tax Exemption (RTE) program is for new purpose-built rental housing, non-profit rental housing, and co-operative housing within Kelowna’s Permanent Growth Boundary. The program provides eligible projects with relief from a share of municipal property taxes and is guided by the City’s Revitalization Tax Exemption Program Bylaw No. 12561.
*IMPORTANT* Please note that purpose-built rental and non-profit rental housing projects must have the rental only subzone and must submit an application before a Building Permit has been issued. An application may be submitted after building permit issuance in the event that extenuating circumstances exist, which would need to be approved by Council – see Bylaw No. 12561 Section 7.4 for more information. Projects that have received occupancy are NOT eligible for the RTE program.
Purpose-built rental housing, co-operative housing, and non-profit rental housing are eligible for tax exemptions:
- Purpose-built rental includes a project with 5 or more dwelling units that are intended to be used for rental housing. Purpose-built rental housing must have the Rental Only subzone and does not include buildings that are stratified.
- Co-operative housing includes projects with 5 or more dwelling units that are owned by a legal association incorporated under the Cooperative Association Act.
- Non-profit rental housing includes projects with five or more dwelling units that are owned and operated by a non-profit housing provider, local government, or the Provincial Rental Housing Corporation (BC Housing). Non-profit rental housing must have the Rental Only subzone.
The program provides purpose built rental projects and co-operative housing projects with a 100 per cent municipal tax exemption on the “revitalization amount” attributed to residential land uses This is defined in the RTE Bylaw as “the municipal portion of property tax calculated in relation to the increase in the assessed value of improvements on the property resulting from the construction or alterations as outlined in section 6 of this bylaw.”
For example, if you build a four-storey apartment building on a lot that was previously vacant, you would receive a municipal tax exemption for 10 years on the value of the new building (the improvements). The tax exemption doesn’t extend to the land value for purpose-built rental projects and co-operative housing projects.
For non-profit rental housing projects, the program provides a 100 per cent municipal tax exemption on the “revitalization amount” attributed to residential land uses and 100 per cent of the “land amount”.
The revitalization amount is defined in the RTE Bylaw as “the municipal portion of property tax calculated in relation to the increase in the assessed value of improvements on the property resulting from the construction or alterations as outlined in section 6 of this bylaw.”
The land amount is defined in the RTE Bylaw as the “municipal portion of property tax calculated in relation to the assessed value of the land on the property.”
Incentives in the form of tax exemptions are available for projects within the City Centre and Rutland Urban Centres as part of the Revitalization Tax Exemption Bylaw No. 12561. These incentives are in place to encourage new investment as part of our overall strategy to build vibrant urban centres. Below are some frequently asked questions for the Revitalization Tax Incentive Program for City Centre and Rutland Urban Centres.
*IMPORTANT* Applications must be made before a Building Permit is issued. An application may be submitted after building permit issuance in the event that extenuating circumstances exist and would need to be approved by Council – see Bylaw No. 12561 Section 7.4 for more information. Projects that have received occupancy are NOT eligible for the RTE program, no exceptions.
Residential, commercial and mixed-use development projects are eligible for tax exemptions in the City Centre, with different requirements for Tax Area 1 and Tax Area 2. Residential, commercial and mixed-use projects are also eligible for tax exemptions if they’re within Tax Area 3 in Rutland Urban Centre. All projects must be consistent with the future land use designation for the parcel, as set out in Kelowna’s Official Community Plan, and meet the requirements of the Revitalization Tax Exemption Bylaw.
- Tax Area 1 allows for 100 per cent municipal tax exemptions on the revitalization amount on the parcel for any residential or commercial project in the area
- Tax Area 2 encourages larger projects by:
- Providing a 100 per cent revitalization amount on the parcel for a project with minimum floor area of 3,716m2 (40,000 sq ft)
- Providing a 75 per cent revitalization amount on the parcel that can be attributed to a residential land use
- Providing a 50 per cent revitalization amount on the parcel that can be attributed to a commercial land use, for a project with a floor area of less than 3,716 m2 (40,000 sq. ft.)
- Rutland Tax Area 3 allows for a 100 per cent municipal tax exemptions on the revitalization amount on the parcel for any project in the area
For all active incentive areas, the project must have a construction value of $300,000 or greater, determined by the building permit issued for the project.
We offer developers of non-market purpose-built rental housing the opportunity to obtain grant funding as a measure to offset Development Cost Charges. Approved grants are applied against the Development Cost Charges at time of Building Permit.
Projects must be an affordable rental building with five or more units, and units must be secured by a housing agreement with the City of Kelowna or BC Housing. Dwellings qualifying for funding must be reasonably expected to start construction in the year the grant is awarded and have not yet received a Building Permit. Also, projects must be located within the Core Area, the Glenmore Valley Village Centre or the University South Village Centre. For more info on eligibility, please review the Council Policy on Rental Housing Grants Eligibility.
Currently the pool of funding available is $300,000. The grants are provided in the form of DCC Credits on a per-unit basis. The grant amounts are determined by the number of applications that the City receives, with up to $8,000 for three- or more-bedroom units, $4,000 for two-bedroom units and $2,000 for bachelor or one-bedroom units available.
The grant program was updated in 2016 to more accurately reflect the cost of developing larger units and to support the creation of family-friendly rental units based on the low vacancy rate for three-bedroom units in Kelowna.
To be eligible for the grant funding, affordable rental projects must be located within the Core Area, Glenmore Valley Village Centre or the University South Village Centre as defined by the OCP Bylaw No. 12300 and meet one of the following requirements:
- Non-market rental housing units where a non-profit housing provider is the applicant
- Non-market rental housing units where a long-term operating agreement (15 years or more) is in place between a for-profit developer and a non-profit housing provider for a minimum of 10 per cent of the total units within any individual rental housing project. Only the units that are managed by a non-profit are eligible for the grant.
- Non-market rental housing units where a long-term operating agreement is in place between a for-profit developer and the Provincial Rental Housing Corporation (BC Housing)
Micro-suite units won’t be eligible to receive the rental housing grants as they’re not required to pay development cost-charges.
Applicants must fill out the application form and submit it to the Housing Policy and Programs department at [email protected] by September 12, 2025. You will need to provide basic information about your project, including site information, unit mix/sizes and the ownership of the land.
The Density Bonus Program is a development incentive available in Kelowna’s Urban Centres that allows additional building height and/or floor area (bonus density) in exchange for affordable housing contributions. The updated program aligns with provincial requirements and supports the City’s Housing Action Plan and Official Community Plan by directing density bonus benefits toward new affordable housing.
How the Density Bonus Program works
- Projects may be able to achieve additional height and/or floor area above the base zoning (bonus density) in eligible Urban Centre areas.
- In exchange for bonus density, the applicant provides an affordable housing contribution as either:
- Affordable housing units delivered as part of the development; or
- Cash-in-lieu of units, paid into the City’s Affordable Housing Reserve Fund.
- Contribution requirements are based on the amount of bonus density that is actually constructed.
- The City will review and update rates on a regular cycle (every two years), informed by financial feasibility analysis.
- The City reports annually on density bonus payments, expenditures, and balances to support transparency and accountability.
The updated Density Bonus Program applies in Kelowna’s Urban Centres. Base building heights and potential bonus heights are identified through the Zoning Bylaw, providing clearer direction on what can be built and where density bonusing may be considered.
- The development must be located within an eligible Urban Centres area.
- The proposal must be seeking bonus height and/or floor area above what is permitted as-of-right in the Zoning Bylaw.
- The applicant must provide an affordable housing contribution through on-site units or cash-in-lieu, in accordance with the program requirements in effect at the time of application.
- All standard planning and regulatory requirements still apply (e.g., Development Permit, rezoning if needed, servicing, and other applicable City bylaws).
Discuss density bonusing early with the City as part of your pre-application or initial project review. Density bonus details are typically confirmed through the development approvals process (e.g., Development Permit and/or rezoning, where applicable), alongside the proposed form of affordable housing contribution.
- Confirm your site is within an eligible Urban Centre area and review the base and potential bonus height provisions in the Zoning Bylaw.
- Submit your development application (and rezoning, if required) identifying the bonus density being requested.
- Provide your proposed affordable housing contribution (units or cash-in-lieu) for review as part of the application.
- If approved, complete the required agreements and payment, or unit delivery requirements as part of permit issuance, as applicable to your project.
- Development permits already approved by Council under the previous density bonus program may proceed in accordance with those terms. In-stream applications may continue to be processed under the previous density bonus provisions.
- New applications submitted after the May 25th, 2026, adoption date must comply with the updated requirements.
For Density Bonus related inquires, contact the Development Planning Department at [email protected] about eligibility, contribution options (units or cash-in-lieu), and how density bonusing may apply to your project.
