Builders of three apartment blocks with nearly 300 homes could get a tax break worth $1.8 million from the City of Kelowna.
Since all suites will be rental, the project near Orchard Park mall qualifies for a city program that offers a municipal tax reduction over 10 years.
The initiative was launched when Kelowna was experiencing record low apartment vacancy rates and has continued despite the construction of many new rental complexes.
The apartment rental vacancy rate was 0.2% in 2016 but it had climbed to 2.7% in January 2020, according to the Canada Mortgage and Housing Corporation. About 1,100 new rental units were built in 2017 alone.
"There continues to be strong demand with a growing proportion of Kelowna's population living in rental housing," reads part of a staff report going to city council on Monday.
"Based on the most recent census, 73% of new households in Kelowna identified as renters, highlighting the importance of adding long-term rental units to keep pace with population growth and shifting housing preferences," the report states.
Terms of the tax break program do not require builders to offer the new units at anything other than going-market rates.
The three-building project near the south-east corner of Dilworth Drive and Baron Road, advanced by a Vancouver company, will have 31 studio apartments, 181 one-bedroom suites, 76 two-bedroom units, and six three-bedroom homes.
The tax exemption applies to the value of buildings, not the land upon which the projects are built.
The city also offers other tax incentives and reductions on development cost charges that are aimed at the construction of rental housing units that are offered at below-market rates.