Council talks tax breaks, secondary suites in city report

City planners have developed 23 recommendations to make housing more accessible and affordable in Kelowna.

It's part of a Healthy Housing strategy, that was presented to council on Monday.

An initially confusing suggestion was around the building of rental housing - as the city currently offers 10 years of tax breaks to developers who add to the city's supply.

While the report talked about extending rental agreements from 10 to 25 years, Planning Manager James Moore says they're not proposing longer-term tax cuts.

He says staff just want to ensure the use of the building.

"The recommendations here don't recommend an increase to the tax exemption to 25 years, they recommend an increase to the housing agreement to 25 years, which is the piece that ensures that this rental stays rental. So we're recommending that piece increase to 25 years," he said.

Moore says that when the vacancy rate is that low, rents are more expensive, which is a big incentive for developers to build rental units.

He says tax breaks matter most when the vacancy rate climbs higher, as developers are less inclined to build rentals when there's more supply on the market.

While discussing those tax breaks, council asked about secondary suites that are built into detached houses.

Moore says those can help with a lack of rental supply, but that they're not actually acounted for when determining vacancy rate.

"When we talk about a vacancy rate of 0.2%, that's a vacancy rate among primary rental market apartments, not among secondary suites," he said.

"So if you're adding secondary suites, you're not actually improving your vacancy rate. You may be improving the availability of housing overall, it might be a really positive thing for the community, but there is a seperate vacancy rate that's collected for the secondary rental market. And it's ususally a little bit higher."

After hearing that, Councillor Charlie Hodge floated the idea of incentivizing suites for homeowners.

Councillor Gail Given says she doesn't think that's the answer.

"I actually take the opposite perspective, I think the secondary suites that get converted into short term rentals should be paying significant licensing and taxation fees, to discourage those types of properties from suddenly transitioning from rental properties into short term rentals," she said.

"I think we need to be very cautious that people aren't building secondary suites to become 10 month-a-year rentals and two month-a-year short term rentals."

Another suggestion was to reduce parking requirements for some buildings, as a way to lower the cost of development.

Multiple councillors warned planners to tread carefully, as any changes to parking would be hotly contested.