Developer incentives
We have several incentives available to developers to encourage alignment with the City’s strategic priorities for urban development. Tax incentives are available for development in City Centre and Rutland Urban Centres, and grants and tax incentives are available to promote the development of purpose-built rental housing.
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.
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.
View the Revitalization Tax Exemption Bylaw No. 12561 for more information.
- 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.
The program provides the exemption on the “revitalization amount.” This is defined in the Revitalization Tax Exemption 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 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.
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 2020 will have missed BC Assessment’s deadline for new projects. Therefore, the building will be assessed in 2021 and the 10-year exemption will start in 2022.
At minimum, you should have a Development Permit Application submitted before you apply. If a rezoning application is also involved, it should have progressed to 3rd Reading before making a Revitalization Tax Exemption application. In all cases, an application must be made before construction begins. Consult with the Policy and Planning Department with any questions.
To apply, download the relevant Revitalization Tax Exemption Application Form and the Revitalization Tax Exemption Checklist to ensure you have all the required information.
We offer incentives to housing in strategic ways to ensure that the type of housing (e.g.: rental, ownership) and the location of new housing 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 tax exemption program. Below are some frequently asked questions for the rental housing incentive programs.
Rental Housing Grants Program
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.
**New for 2024 application intake only – On May 27, 2024, Council authorized temporary enhancements to the Rental Housing Grants Program:
- Increasing the available pool of funding from $300,000 to $3.3 million for 2024 intake only
- Maximum possible grant funding increased to cover the entire DCC amount per project. Grant funding will not be linked to bedroom composition of units.
- Application must be submitted by
August 9, 2024and Building Permit must be issued by December 31, 2025 - application deadline extended to August 20, 2024
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.
** New for 2024 only: the pool of funding has been increased to $3.3 million.
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.
**New for 2024 only: Grant funding will not be linked to bedroom composition of units.
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. 10500 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.
**New for 2024 only: the application deadline is August 9, 2024 application deadline extended to August 20, 2024.
Applicants must fill out the application form and submit it to the Policy and Planning department. You will need to provide basic information about your project, including site information, unit mix/sizes and the ownership of the land.
Each year, the deadline for applications is in the fall (end of October), with the funding being provided in the following calendar year. Please contact Policy & Planning for further details.
Rental Housing Tax Exemptions
Another developer incentive is the revitalization tax exemption program for purpose-built rental housing. The program provides eligible purpose-built rental housing projects with relief from a share of municipal property taxes. This program is guided by the City’s Revitalization Tax Exemption Program Bylaw No. 12561.
The program provides a 100 per cent municipal tax exemption on the “revitalization amount.” This is defined in the Revitalization Tax Exemption 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.
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 2020 will have missed BC Assessment’s deadline for new projects. Therefore, the building will be assessed in 2021 and the 10-year exemption will start in 2022.
You should submit your rental housing tax exemption application after you have submitted a complete development permit application and your project has established some timelines for construction and occupancy.
To apply, download the relevant Revitalization Tax Exemption Application Form and the Revitalization Tax Exemption Checklist to ensure you have all the required information.
At minimum, you should have a Development Permit Application submitted before you submit a rental housing tax exemption application. If a rezoning application is also involved, it should have progressed to 3rd Reading before making an application. In all cases, an application must be made before construction begins. Consult with the Policy and Planning Department with any questions.
