The federal Conservatives inked a$386-million deal with the province Thursday to build low-cost housing and renovate existing units across Alberta over the next two years.

During a grand opening ceremony for Alice Bissett Place, an affordable housing complex in Inglewood, federal Environment Minister Jim Prentice and Alberta Minister of Housing and Urban Affairs Yvonne Fritz signed the agreement.

The money, which is the largest investment in social housing in 20 years, will go toward construction of housing for seniors, the disabled, immigrants and the homeless.

"These are extremely important projects to the elderly, also to people with disabilities and people who are less fortunate and need a place to live," said Prentice, a Calgary MP and the regional minister for Alberta.

The two-year deal includes $135 million from the federal government and another $251 million from the province.

Fritz said the province will immediately start injecting the money into the economy.

"We are announcing the request for proposal process in the next week," she said. "We expect to get all those in by September, make decisions and help the community as quickly as possible."

The first priority, she said, will be putting some money into some of the older seniors' buildings that need upgrades.

Fritz said it's perfect timing to start building social housing.

"Construction costs are 25 per cent less what they were even six or eight months ago," she said. "I know that we are going to have far more capacity for buildings being built than we had previously with funding.

"So you can see how $386 million will benefit the community greatly."

The funding commitment was also welcomed by the agency overseeing Calgary's 10-year plan to end homelessness.

"It's terrific news," said Tim Richter, president of the Calgary Homeless Foundation, which holds its annual general meeting today.

"It makes perfect sense as an economic stimulus. At the same time as you are reducing costs by reducing homelessness and getting people into housing, you are also creating jobs. It's a two-fer."