A $1.6 million project to renovate and tenant 23 vacant pensioner units in Rotorua is one step closer to being greenlit.

On Wednesday, the Rotorua Lakes Council also narrowly approved consulting on leasing the full 152-unit portfolio a community housing provider to make running it more financially sustainable.

Elected members were told a provider could access a government subsidy to cover up to 70 per cent of market rent and aim to keep rents similar to now.

Mayor Tania Tapsell urged the council to pursue this option, saying the current financial model was “very difficult”.

Some councillors, however, wanted more information on how current tenants would be impacted, while others wanted to wait for the new Government’s housing policy direction.

The council’s waiting list for the units is capped at 40 and has been full for months, but the 23 vacant units need full refurbishment before tenants can move in.

At the Community and District Development Committee meeting, elected members voted to put $1.1m towards the renovations across the first two years of the draft 2024-24 Long-Term Plan, as staff recommended. This would add to about $500,000 in the capital renewals budget.

A final decision would follow community and tenant consultation.

Leasing was expected to provide opportunities to grow the portfolio, ensure it was financially sustainable, provide greater support services for vulnerable tenants and ensure ongoing housing security for existing tenants.

Council development and partnerships manager Stephanie Kelly said the success of this option relied on an income-related rent subsidy being approved for tenants.

Council landlords could not access this but community housing providers could.

Upkeep for the units was $2.1m a year, of which $800,000 was covered by rental income.

Without the government subsidy, ratepayers would cover the other $1.3m a year to manage the portfolio.

Rotorua mayor Tania Tapsell was not born when the last pensioner units were added to the council portfolio. Photo / Laura Smith.

According to the council website, weekly rents varied but most single people would pay $120 a week and couples around $142. The average rental property in Rotorua cost $550 a week in August according to Trade Me data.

Community housing providers could charge market rent but the subsidy could mean tenants paid similar to what the council charged them.

It was “really important” and he hoped the new government’s policy direction would work in the council’s favour.

He said National Party material indicated an intention to review Kāinga Ora and strengthen the use of community housing providers.

Community and district development group manager Jean-Paul Gaston said the subsidy covered up to 70 per cent of market rent.

Any lease could include conditions for review and accountability and require applicants to provide evidence they could meet the council’s objectives.

If the leasing proposal did not work out, the status quo would continue and more options would be presented to the council.

Tapsell said staff were “loving and caring” to tenants, but worked to a “very difficult financial model”.

Average rents were about $600 in Rotorua so “this was urgent”. The council’s waitlist had been full for several months.
She backed the leasing option so the council could “make the next steps to provide better solutions”.

Tapsell asked when the last time the council’s housing stock increased, and heard it was in the 1980s.

“I wasn’t even born then.”

Councillor Robert Lee said under current legislation, leasing was the most prudent step, and he looked forward to hearing from the community and providers.

Councillor Gregg Brown said it was a win for tenants and ratepayers and he saw “no fishooks in this”.

Councillor Conan O’Brien said it was great there was discussion on investment but it was a shame the council had “such a poor record of maintenance that now we are having to talk such large sums of catch up”.

Councillor Conan O'Brien agreed with more investment into council pensioner housing, but not leasing. Photo / Laura Smith.

He said did not support leasing and said elected members needed more information from a social impact point of view - later clarifying to Local Democracy Reporting he was talking about how current tenants would fare under a community housing provider.

Councillor Don Paterson said there were “too many ifs and maybes”.

“This is a major strategic asset … we have a duty of care for our citizens and we haven’t had enough detail regarding certain aspects of it for me to support this.”

Paterson said he believed the process had been rushed and wanted to wait for central government to “have a say”.

Councillors Paterson, Waru, O’Brien, Trevor Maxwell and Lani Kereopa voted against the recommendation to include the options in the draft Long-Term Plan.

The council also agreed to change the criteria for new tenants, including upping the maximum income to $35,000 for an individual, and raising the minimum age to from 60 to 65, or 60 for those on an invalid benefit.

Tenants would receive a letter about Wednesday’s decisions.

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