Wellington City Mission has secured $10 million from the Government's shovel-ready programme to redevelop a commercial building it owns in Mt Cook.
The Oxford Terrace site will be transformed into supported-living units, public bathrooms and showers with 24 hour access, and a food distribution warehouse.
The plan is for the city mission to eventually move its Newtown services there.
The building project is called Whakamaru, a name gifted by mana whenua meaning to "shelter, to safeguard, to protect".
Wellington City Missioner Murray Edridge said it will be a transformative community hub for the region.
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"Whakamaru will help us respond to some of Aotearoa New Zealand's greatest challenges such as housing supply and homelessness, food insecurity and social isolation. This will give us far greater capacity to serve and support some of our City's most vulnerable.
"By providing supported housing and wrap-around support at Whakamaru, it will reduce people's utilisation of hospitalisation and other services. This represents an economic and social benefit and saving to the region of $2.6 million per annum."
The project is expected to create 120 jobs and generate $12 million in the local economy during the construction phase.
It is due to be completed by 2022.