The City of Calgary is providing a grant of $5.96 million to a non-profit group to create affordable housing for people who are homeless or on the brink of losing their homes.

The Calgary Homeless Foundation will use the money, announced Tuesday, to buy and renovate existing residential buildings throughout the city, including outside of the downtown core. Units will be created mainly for single people and couples, but some family units may be included.

There will be a mix of rent levels β€” with some tenants getting subsidies and others paying market rate β€” in each building in order to create a diverse community, explained the city in a news release.

At least 70 per cent of units will be rented to people who cannot afford to pay market rates. Those individuals or households are identified through a measurement known as the Core Need Income Threshold, which sets out the most someone can earn and remain eligible for a rent subsidy.

'This is a disaster by any measure and with layoffs continuing, we fully expect the problem to get worse before it gets better.' β€”Tim Richter, Calgary Homeless Foundation

Below these income levels, it's difficult for people to find uncrowded housing in good repair, without spending more than 30 per cent of their income for rent.

"We need to be giving people a steady hand up by providing solid opportunities for personal growth, confidence-building and achievement. Those types of life skills can't be fostered and sustained in a shelter environment," said Calgary Mayor Dave Bronconnier in a statement on Tuesday.

The grant, which will come out of provincial funding allocated to the city, is for capital costs only.

About 4,000 homeless people in Calgary

The Calgary Homeless Foundation is the lead agency in implementing the city's 10-year plan to end homelessness, released last year.

Permanent housing, and not a reliance on temporary shelters, is a main pillar of the plan, so people have a safe and stable place to find employment and address mental health or addiction issues.

"You're seeing all orders of government paying more and more attention towards housing, because it is cheaper for governments in the long run to deal with a permanent solution and build permanent housing than it is to deal with people who are homeless," said Bronconnier.

2008 Core Need Income Threshold for Calgary
 Bachelor  $28,000
 1-bedroom  $36,500
 2-bedroom  $46,000
 3-bedroom  $51,500
 Source: Alberta Housing & Urban Affairs 

In the last 10 years, there has been an increase of 650 per cent in the number of homeless people on Calgary streets. The last count in 2006 pegged that number at about 3,400 people.

Tim Richter, president of the Calgary Homeless Foundation said the money comes at a crucial time.

"At any given time in Calgary, more than 4,000 people are homeless, and another 58,000 are potentially one paycheque away from the streets," he said. "This is a disaster by any measure, and with layoffs continuing, we fully expect the problem to get worse before it gets better."

The Calgary Committee to End Homelessness, which is made up of 28 leaders from business, government and social agencies, estimated last year that there could be as many as 15,000 homeless people in the city by 2018.