An empty lot that has been the epicentre of homeless protests in Vancouver's Downtown Eastside is going to be the site of a new $70-million social-housing project, Mayor Gregor Robertson has announced.

Mr. Robertson said Thursday that a city-owned lot at 58 West Hastings Street – where affordable-housing activists and homeless people have been camped out in a tent city since July – will become a facility with about 250 homes and an integrated health centre.

He said the goal is to have 100 per cent of the units subsidized at welfare or pension rates, and with the help of the Vancouver Chinatown Foundation for Community Revitalization, about half the money needed has already been secured or will soon be raised through charitable donations.

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Mr. Robertson said Victoria and Ottawa will be pressed to contribute the balance.

"We want to see the provincial and federal governments step forward to support this project so we can get it up to 100 per cent at welfare rate and old-age pension rate," he said in a news conference at City Hall. "We are excited to now be over 50 per cent. Many projects in social housing end up closer to one third by the time all the funding is assembled but we want to keep the pressure on, given the lack of housing that's available now at welfare and old-age pension rates. We've lost a lot of that over the years and that's what we're going to work hard to regain here on this site."

He said the project will be a major step toward addressing the city's chronic homeless problem.

"We have a pretty dire situation on our streets here in Vancouver. As you well know, we have 539 people living on our streets," he said. "It's still a huge challenge for us with the homeless crisis in our streets and many people who have been bumped out of SRO's [single-room occupancy units], bumped out of what was secure housing for them into very challenging circumstances."

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When he was first elected in 2008 there were 1,576 homeless people in the city and Mr. Robertson pledged to solve the problem. But the numbers continued to grow. This year there are 1,847 homeless people, of which 1,308 are in shelters and 539 are living on the street.

Mr. Robertson said the new project offers "a real opportunity to do something that's never been done at this scale [before]" by providing so many units at welfare or pension rates.

He praised the Vancouver Chinatown Foundation for its funding drive and Vancouver Coastal Health for committing to build a 55,000-square-foot integrated health centre that will be part of the complex.

"The project cost is about $65-million to $70-million, of which we will be responsible to raise about $30-million," said Carol Lee, chair of the Vancouver Chinatown Foundation.

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She said the foundation, which will build both the housing units and the health facility, has just started raising funds but expects to be able to reach its target.

Joy MacPhail, a B.C. NDP MLA from 1991 to 2005 and former minister of social services, will lead the project for the foundation.

Laura Case, Chief Operating Officer of Vancouver Coastal Health, said the medical facility will be geared specifically to meet the needs of the people in the Downtown Eastside. It will be open 12 hours a day, seven days a week.

The lot where the new project will be built has drawn housing protesters for years. A tent city was established there during the 2010 Olympics to draw attention to Vancouver's homelessness crisis and affordable-housing activists moved onto the site again this summer.

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Karen Ward, a board member of the Vancouver Area Network of Drug Users, welcomed the mayor's announcement and said the new housing project likely wouldn't have happened without the tent protest.

She said about 90 people are still camped at the site.

In July, people from the tent city and other affordable-housing activists rallying under the banner, "Our Homes Can't Wait," marched on City Hall. In a subsequent meeting with them, Mr. Robertson promised a social-housing solution by next spring.

"We are pleased the mayor has indicated he's keeping his commitment to the process that was agreed to, which called for rezoning [of the site] by June, 2017 and the goal of having 100-per-cent housing at the shelter rate," Ms. Ward said.

She said the housing project is "geared specifically towards the most vulnerable people," which is what the tent city activists had been asking for.