Kelowna needs 300 new rental units every year due to population growth.
However, since there is such a tight supply across Canada, the city will provide $504,601 in rental housing grants for 94 new units in 2013.
The tight supply is the result of the high cost of building rental accommodation, according to Theresa Eichler, the city's community planning manager. On Monday, she provided city council with a chart showing revenues don't meet costs until the eighth or ninth year.
"Thirty per cent of all homes in Kelowna are rented," she said, adding: "Renting a home is expected to be more attractive as we move forward."
In 2006, rental grants were established from the city's housing opportunities reserve fund to offset the cost of development cost charges, or DCCs. The condition was that grants not exceed the DCCs. The city also provides a property tax exemption for the municipal portion of taxes on housing specifically built for renters.
The 94 units to receive 2013 grants are:
- $365,030 for 68 units at 1121-1151 Brookside Ave.
- $48,313 for nine units at 1330-1332 Sylvania Cres. (non-profit).
- $85,889 for 16 units at 598 Sutherland Ave.
- $5,368 for one unit at 2473 Pandosy St.
Those four projects will involve the payment of more than $1 million in DCCs.
"According to CMHC (Canada Mortgage and Housing Corp.), there have been recent increases in the rental supply, due in part to the surplus of condominiums built for ownership in the Kelowna market," said Eichler.
However, "this situation is expected to be short term with a duration of two or three years. The Kelowna housing market is nearing the end of this time frame."
The city's 2011 housing strategy concluded that purpose-built rental housing would be the best match to address gaps in the long-term housing supply, she noted.
"However, this form of housing is difficult to finance. In 2012, council approved expanding the rental grants program and changing the revitalization tax exemption program to help augment the purpose-built rental housing supply."