Zion House was financed with the help of a £2.5m government grant
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Plymouth's first government-backed accommodation for homeless people is nearing completion.
The £880,000 Zion House will accommodate 12 people in flats and bedsits next to the Salvation Army's 60-bed hostel in Park Avenue.
Most of the money has come from a £2.5m award to the city last year by the Office of the Deputy Prime Minister.
Zion House will give homeless people their first taste of coping on their own before independent housing.
According to the Office of the Deputy Prime Minister (ODPM), homelessness in the South West has increased by 50% in the past four years.
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I have let a lot of people down, but now I want to get back into real society again
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There are about 20 people sleeping rough in the city and 155 homeless, down 10% from 2004.
Lynden Gibbs, manager of the Salvation Army hostel, said: "A lot of people find it easy to live in the structured environment that we have here, but as soon as they get a front door they start falling apart.
"We want to get them into a pattern of behaving in a positive manner and to learn the life skills such as paying their own bills before they can be sent out into wider society."
Zion House will be staffed by three managers to give residents support, with the aim of getting people into independent accommodation after 12 months.
Staff support
Derek Hoare, who has been resident at the hostel for the past six months, is one of those being referred to Zion House when it is completed in November.
He was thrown out of his Plymouth City Council accommodation in 2001 when he was more than £400 in arrears.
Mr Hoare, 43, also lost his council worker job because his drinking was affecting his work.
Now he says he has put his drinking behind him.
He said: "I have worked really hard to get where I am with support from the staff here and social services.
"I'm really chuffed about getting into Zion House.
"I have let a lot of people down, but now I want to get back into real society again."
He added: "Everyone at the Salvation Army has been brilliant. If you have any problems you can talk to any of the staff.
"If I won the lottery I would give half to them."