Kelowna Rethinks Density Bonus Program to Boost Affordable Housing

Kelowna is re-evaluating its density bonus program to enhance contributions to affordable housing while adhering to new provincial regulations. Since its introduction in 2022, this initiative has enabled developers to construct larger buildings than what is typically allowed, provided they contribute financially to community benefits. As of now, a total of 20 projects have entered the program, generating approximately $1.1 million in contributions, with an additional $3.2 million anticipated if all proposed projects move forward.

The contributions have primarily funded streetscape improvements, such as sidewalks and landscaping. However, Kelowna city staff have pointed out that this funding avenue is becoming less effective, given the existence of a more robust, separate program for such upgrades. New provincial mandates require municipalities to update their density bonus bylaws by June 2026. These updates will necessitate greater transparency, financial feasibility studies, stakeholder consultations, and annual reporting.

During a council meeting on August 25, 2023, city staff suggested using this review as a chance to realign the program’s focus on affordable housing. Councillor Luke Stack endorsed this direction but expressed concerns that the bonus system could create additional uncertainty for residents who are already grappling with rapid densification. He noted, “I have found quite consistently that we get a lot of pushback from neighbours saying, ‘Wow, this is a huge increase. We used to have a two-storey building, and now we’re going to have a six-storey building or an eight-storey building,’ and it’s very hard for them to digest that.”

Councillor Rick Webber echoed these sentiments, stating that the density bonus has contributed to many complaints received by the council. He highlighted the duality of the situation, remarking, “There is a certain lure to the idea of not having to deal with that at all, but on the other hand, you have to look at the financial consequences of that.”

Meanwhile, Councillor Loyal Wooldridge expressed surprise at the relatively low uptake of the program thus far. He indicated his interest in understanding what factors could enhance the program’s effectiveness and make it more appealing to developers. “I would hate for us to put up more barriers to limit development, knowing that we have heard from planning over the past couple of weeks that we are going into a soft market right now,” he remarked.

The council has directed city staff to commence the review process, which will involve hiring a consultant to conduct a comprehensive financial analysis. This evaluation will include consultations with developers and a consideration of whether to maintain or eliminate the program altogether.

As the city navigates this critical juncture, the focus will remain on balancing the urgent need for affordable housing against the backdrop of community concerns and regulatory requirements. The outcome of this review could significantly influence Kelowna’s urban landscape in the years to come, shaping the future of housing in the region.