The derelict shell of a warehouse will soon house 25 people with low to moderate incomes.

On Friday, politicians and other contributors gathered to celebrate the new construction project at 575 Pembroke St.

The Greater Victoria Housing Society will operate the rental building and expects to close the property purchase from Knappett Projects next week.

The city donated $250,000 from its affordable housing fund.

Mayor Dean Fortin called it “an investment in the north end of our town that we want to see more vibrant and an investment in our citizens.”

The project will contain commercial space on the first floor and 25 units of bachelor pads and one-bedroom apartments above. Rent will vary between $650 to $750.

The Capital Regional District Housing Trust Fund will also contribute $375,000. The Canada Mortgage and Housing Corporation provided $60,000 toward early research. Home Depot and Coast Capital Savings credit union contributed $25,000 and $30,000 respectively. B.C. Housing is fronting a $1.95-million loan.

The financing is valuable, said Kaye Melliship, executive director of the Greater Victoria Housing Society. The loan comes with a lower interest rate than the society would be able to obtain elsewhere, she explained.

Knappett, which recently redeveloped the adjacent property into its headquarters, will build the housing project. Projected construction timelines run from January to December 2011.