Only non-profit societies like the one that built the Pleasantvale seniors complex in downtown Kelowna, shown here under construction in 2015, will now quality for city grants, council decided Monday.

Builders of for-profit rental buildings in Kelowna will no longer get publicly funded grants, city councillors decided Monday.

The incentives, totalling $300,000 annually, are now only to be available to non-profit societies that are building affordable housing complexes.

"It was a bit of a bother seeing so much of these resources going into the market rental pool," Coun. Loyal Wooldridge said.

Changing the criteria, planners say, will help increase the number of rental units available in Kelowna at below-market rates.

The grants are intended to partially offset the development cost charges that must be paid to the city by the builders of all new residential units. Depending on the location of the proposed housing complex, DCCs range from $13,000-$22,000 per residential unit.

Currently, both private-sector builders and non-profits backed by the B.C. Housing Crown corporation can access the grants.

Because all qualifying applications are approved for a grant, the grants typically reduce a builders' DCC payments by less than 10 per cent.

Although they can get the grants, private-sector builders of rental housing projects would likely proceed with their development even without the city's financial support, planners suggest.

But the grants can be the deciding factor in whether a non-profit's housing project proceeds, planners say.

"In staff discussions with market rental housing providers, these grants are not seen as vital to a project's viability," planner Ross Soward says.

"In the case of non-profit rental projects (often providing affordable housing or supportive housing), every incentive available is highly important to decisions about whether a project will proceed," Soward says.

Preventing private-sector builders from getting such grants, Soward says, will increase the amount available to non-profits.

However, staff recommend the city keep in place largely as is a separate program also aimed at promoting the construction of more rental housing. That program offers a 10-year-break on municipal taxes to both private firms and non-profits that construct rental buildings.

About 25 such long-term tax breaks have been approved in the past five years, to a mix of both private firms and non-profits. Without the tax breaks, city officials suggest, some of the developments may not have proceeded.