There are not any single fixes to address housing affordability or rising rental rates in the Central Okanagan, says Kelowna-Lake Country MLA Norm Letnick.
But Letnick acknowledged the negative impacts are diverse, from rising construction and financing costs to a labour shortfall and traffic gridlock as people move away from Kelowna where they work to surrounding communities and become commuters.
“And you see businesses not able to expand and moving elsewhere so there are many economic challenges,” Letnick said.
The MLA was a panel speaker along with Ryan Smith, City of Kelowna director of planning and development services, and Brad Klassen, CFO and co-CEO of Troika Management Corp., at a forum to address the local housing crisis hosted by the Kelowna Chamber of Commerce on Thursday (Sept. 28) at the Four Points by Sheraton hotel.
Letnick said he first got involved in municipal politics in the Alberta ski resort of Banff in 1992 on the issue of housing affordability.
He said Banff created a new entity, operated at arm’s length from city council, to acquire federal government land and build housing developments targeted for family entry home ownership at 25 per cent below market value housing prices.
That initiative continues today in Banff, and Letnick is now behind a similar initiative in Kelowna as co-founder of the YeYe Housing Society set to build its first 20-unit stacked townhouse project.
“We hope to break ground this year. What we are proposing is not the solution, but one of many solutions that will be needed,” Letnick told the chamber luncheon audience of more than 100 people.
The difference between Kelowna and Banff, he noted, is it will require participation from private land owners willing to sign a lease with the society and take a longer term, more capital gains tax-friendly, return on their land ownership investment.
Klassen outlined some of the challenges facing the home construction industry, from government taxation and building permit fees to the estimated 8,000 current labour shortfall in the construction industry and financing challenges.
Klassen said for every 10 projects that begin the development process, only three to four actually reach completion in a process that can take up to three years.
To meet the housing shortfall, Klassen says Canada Mortgage and Housing Corporation says by 2030 annual new home construction should reach a level of 3.5 million, where current construction for 2022 was 260,000.
In B.C., the goal for 2030 is 570,000, which is an increase of 25 per cent over current construction levels.
“Everything, everywhere all at once is happening in the housing industry,” said Klassen.
He did identify one positive step when Ottawa removed the five per cent GST hit on the construction of new rental apartment buildings, which Klassen says relieves some financial pressure on developers to see more projects through to fruition.
“Having an excess rental market gives people options. Rents probably won’t go down (in the short-term) but you won’t see the increases we have seen recently,” Klassen said.
Smith reiterated projected city needs from a Housing Needs Assessment update given to city council earlier this month, which noted 1,870 to 2,650 new housing units will be needed annually by 2031.
He said technology using artificial intelligence has been employed by the city through a new prototype to streamline and walk potential builders through the approval process. The service will be launched by city hall Oct. 3.
“It will make it easier for people looking to build a carriage house or a secondary suite,” he said.
He also noted staff will be returning to council soon with a report on the impact of short-term rentals on the housing rental market.
“Any changes coming are likely to generate a lot of news and bring out a lot of opinions, but short-term rentals are having an impact on long-term housing supply and aggressive action is needed,” Smith said.
In a brief question-and-answer segment, Letnick was asked about balancing the rights of individual property owners against the greater needs of the community regarding short-term rentals.
Letnick said finding a compromise will require “the wisdom of council to look at all the nuances” of any change from the existing short-term rental policy.