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 throughout Kelowna.

Urban Centre Incentives

We have incentives in the form of tax exemptions available for projects within the City Centre and Rutland Urban Centres as part of the City’s Revitalization Tax Exemption Bylaw 9561. 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.

What types of projects are eligible?

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 are within Tax Area 4 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.  

Where are the exemptions available?

Currently, the incentives are available in Tax Area 1 and Tax Area 2 within the City Centre and within Tax Incentive Area 4 in Rutland Urban Centre.

What are the different policies for Tax Areas 1, 2 and 4?

Tax Area 1 allows for a 100% municipal tax exemptions on the revitalization amount on the parcel for any residential or commercial project in the area. In contrast, Tax Area 2 encourages larger projects by providing a 100% revitalization amount on the parcel, for a project with minimum floor area of 3,716m2 (40,000 sq ft) or 75% of the Revitalization Amount on the parcel which can be attributed to a residential land use, and/or 50% of Revitalization Amount on the parcel which 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.). Tax Area 4 allows for a 100% municipal tax exemptions on the revitalization amount on the parcel for any project in the area.

I am doing a major renovation of an existing building, is my project eligible?

For all of the active incentive areas the project must have a construction value of $300,000 or greater, determined by the building permit issued for the project.

What if I am doing a project in Tax Area 3?

Tax Incentive Area 3 was capped at 200,000 sq. ft. of floor area. As of December 2016 there is no more capacity for projects within Tax Area 3. In 2017 it will be removed from the map.

What part of my taxes are exempt?

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 does not extend to the land value.

When will my tax exemption start?

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, if a project completes construction in December of 2017 it will have missed BC Assessment’s deadline for new projects. Therefore, the building will be assessed in 2018 with the ten-year exemption starting in 2019. 

At what point do I apply to the Revitalization Tax Exemption?

At a minimum you should have a Development Permit application submitted before you apply. But, generally you should receive direction from the planner that you have been assigned as to the apporpriate time to apply for a tax exemption.

How do I apply?

Interested parties can download the relevant Revitalization Tax Exemption Application Form and the Revitalization Tax Exemption Checklist to ensure you have all the required information.

Housing Incentives

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 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.

What kinds of projects are eligible for rental housing incentives?

Projects must be a purpose-built rental building with five or more units and units must be secured as rental by entering into a housing agreement with the City of Kelowna. Dwellings qualifying for funding must be reasonably expected to start construction in the year the grant is awarded.

How much money is available?

Currently the pool of funding available is $420,000. 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. Over the past couple of years, the grant amounts have been in the range of $500-$1,000 per unit.

Why are three bedrooms eligible for a higher grants amount?

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, as there is a zero per cent vacancy rate for three bedroom units in Kelowna. 

Who is eligible, do I need to be a non-profit?

Anyone can apply as long as the project  meets the eligibility criteria. The project must be five or more units and the units must be secured through a housing agreement.

How do I apply?

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 ownnership of the land.

When is the deadline?

Each year the deadline for applications is in the fall with the funding being provided in the following year. For example, this year the deadline for applications was November 30th, 2016 with grants being disbursed in spring of 2017 as construction begins on the various projects. 

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 Bylaw No. 9561.

Does my project need to be downtown to be eligible?

No. Projects can be anywhere within the city to apply for the rental housing tax exemption. However, the City will only consider applications when the vacancy rate for the rental market is at or below three per cent based on the annual CMHC rental housing report. The vacancy rate from the most recent CMHC report was is 0.7 per cent.

What part of my taxes are exempt?

The program provides a 100% 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 does not extend to the land value.

When will my tax exemption start?

Generally, the 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, if a project completes construction in December of 2017 it will have missed BC Assessment’s deadline for new projects. Therefore, the building will be assessed in 2018 with the ten-year exemption starting in 2019.  

At what point do I apply to the Revitalization Tax Exemption?

If you are also applying for a Rental Housing Grant you will likely want to submit your rental housing tax exemption application after you complete your housing agreement for your Rental Housing Grant. 

How do I apply?

Interested parties can download the relevant Revitalization Tax Exemption Application Form and the Revitalization Tax Exemption Checklist to ensure you have all the required information. If you are also applying for a Rental Housing Grant you should indicate to staff that you intend to apply.