The Southern Chiefs' Organization and True North Real Estate Development plan to work together to build a residential tower together at downtown Winnipeg's Portage Place mall, the two organizations announced at a news conference on Friday.

The SCO, True North and the provincial government held the news conference to announce more details of plans to redevelop the mall, which retail stores have largely abandoned since its glory days in the late 1980s when it opened in an effort to revitalize downtown Winnipeg.

True North Real Estate Development president Jim Ludlow said the residential tower will include affordable and accessible one-, two- and three-bedroom units.

It will rise 13 storeys above the west end of the existing two-storey mall, kitty-corner from the former Hudson's Bay Co. building, which the Southern Chiefs' Organization now owns and intends to convert into a mixed-use project called Wehwehneh Bahgahkinahgohn.

Southern Chiefs' will have an option to purchase the residential tower over time. An official with the Southern Chiefs' said Wehwehneh is still slated to include residential units of its own.

Ludlow also announced that True North will sell the walkway connecting Portage Place to the former Bay building to SCO for $1.

True North has until June 30 to decide whether to exercise an option to purchase the mall. The company estimates its purchase and redevelopment will cost approximately $650 million.

Ludlow said True North only has to engage in "some plumbing" — work on the final details of the plan — before it exercises its option to purchase the Portage Place mall from Vancouver's Peterson Group, along with the parkade below it and rights to build above it from the non-profit Forks North Portage Partnership.

On Friday, Manitoba Premier Wab Kinew announced the province has signed a letter of intent to enter into a 35-year lease with True North to use space within a 12-storey health-care tower slated to rise above the east side of the mall.

The 300,000-square-foot health-care centre was first announced under the previous Progressive Conservative Manitoba government. It will include a primary care clinic, mental health and addictions support services, renal dialysis and an expansion of the private Pan Am Clinic.

Ludlow said Friday construction on the health-care tower would start in 2025 and finish by 2028.

Kinew said the lease of space within the tower and new medical facilities, over and above what the province already operates, would cost the province an additional $77 million a year.

That will serve as the province's primary form of financial support for the Portage Place redevelopment, the premier said.

True North is also expected to ask the federal government for assistance with the housing component and public spaces. Federal cabinet minister Dan Vandal told reporters Ottawa is amenable to some form of support.

Ludlow also said True North will ask the city and province to offer the project tax-increment financing, a form of property tax incentive that usually targets redevelopment projects. Ludlow also said True North will ask the city to assist with streetscaping at the development.

Winnipeg Mayor Scott Gillingham said while no formal request has been made of the city, it would be amenable to requests such as the ones Ludlow mentioned.

Kinew said he is not ruling out tax-increment financing.

In addition to the new towers, the True North redevelopment plan calls for demolishing the glass-enclosed atrium at Edmonton Street and replacing it with an open-air connection to Central Park.

The middle of the mall will be converted into community centres and offices for community organizations, with a nominal amount of retail space and some food services, according to the plans.

A full-service grocery store would occupy 19,000 square feet on the main floor of the residential tower, according to the plans.

The YMCA, which has renovation plans of its own, would remain in place at the northwest corner of the project.

Prairie Theatre Exchange would also continue to occupy its existing third-floor space in the centre of the mall, but might end up with a main-floor entrance as well, Ludlow said.

True North also has plans to carve out two circular spaces alongside Portage Avenue to eliminate the monolithic look of the existing Portage Place edifice.

Mark Chipman, True North's executive chair, also said Friday work will resume in June on the Sutton Place Hotel, the last component of True North Square. Work on that project, which will be connected to RBC Convention Centre by a skywalk, was placed on hold during the pandemic.