The City of Winnipeg and the Manitoba government will spend up to $20 million to spur downtown residential development.

Premier Greg Selinger, who announced the initiative with Mayor Sam Katz on Thursday, said it could result in up to 800 new residential units in the area.

Getting more people living downtown and making the area vibrant and safe, even after dark, is the goal of a new development incentive. (CBC)"Downtown Winnipeg has a lot to offer residents and we want to be sure that we are using the tools we have to encourage the growth and development of the downtown," Selinger said.

The program offers grants to developers who renovate old units or build new condos. It is also designed to encourage the creation of more affordable housing for low-income people and families with disabilities.

"This is what the vision is that we have for the downtown — a good mix of citizens living here; who want to invest here in terms of their homes," Selinger said.

'This is what the vision is that we have for the downtown — a good mix of citizens living here; who want to invest here in terms of their homes.'—Premier Greg Selinger

To that end, developers who want the grant must commit 10 per cent of the housing to affordable rates — with monthly rents ranging from $500 to $975.

"I am pleased our government is the first in Canada to implement innovative tax increment financing in partnership with the city and build on downtown redevelopment success by creating a flexible incentive for developers to create a variety of urban housing options for people of many different income levels," Selinger said.

Developers will be provided a grant equal to the incremental taxes on improved property for up to 15 years. That means they could be eligible for grants of up to $40,000 for each rental or condominium housing unit.

"You have to, in some cases, renew older structures. Sometimes you have to move some buildings," Selinger said, explaining why a tax incentive was needed. "It's always a little more cost-prohibitive to do these in older areas, as opposed to a bare site."

Much of the new development is expected to occur in an area east of Winnipeg's Main Street, known as the East Exchange.

"In order for our downtown to remain a vibrant choice destination, we need to ensure we are providing an attractive strong residential component that will keep feet on the street long after the storefronts close," said Katz.

"More people downtown means a safer downtown, and with the commitment from the province today, we are a step closer to increasing the capacity of the residential component that will allow those who want to live downtown a viable option."

John Giavedoni, a current resident of Winnipeg's East Exchange district, relaxes in his condominum and welcomes the possibility of new neighbours. (CBC)The city and province will pay for the program by drawing on the property and education taxes the new developments generate.

The news was welcomed by people currently living in the district.

"You can't have a vibrant community with just a few hundred people downtown, or a few thousand," John Giavedoni, a condominium owner in the area, said Thursday. "You need a significant population to give the area that life and vibrancy."

The program, which will be offered for three years, officially begins in May.