He said the council would do what they could to help them find alternate accommodation.
They would also be installing gates that would lock at night.
"The first sight most people see of Napier is these people in the bus terminal, that's unacceptable to me," he said.
Kiri Swannell said she had noticed a definite increase in the number of people staying in the shelter, because there had been more people living on the streets. She runs a soup kitchen with her husband in Clive Square on Monday nights which is frequented by those from the terminal.
"If they go past and see one guy sleeping in there, and they are homeless too, they will end up there," she said.
People had recently raised concerns with Napier City Council about safety and hygiene, as well as drugs and alcohol being used in public.
Rowena Gotty was one of those staying at the terminal until she recently "moved out". Now staying with a cousin, she returned to the terminal most days to see those who remained.
There were six who always stayed in the shelter, and this was increasing with the warmer weather, Ms Gotty said.
"More will come ... it will be chocka in summer," she said.
Her partner said he had been staying at the terminal "for 12 months, or a couple of years".
According to them, the terminal was popular because it was in the middle of town, and it was warm "when you've got the right blankets".
It was also nice to have company, and with the buses stopping there they got to meet people from all walks of life.
Ms Gotty said those who stayed at the shelter mostly got on. The real problem was with "outsiders" - people who had homes but came to the shelter to drink.
"Outsiders cause trouble, our crowd never cause trouble. [But] we can handle them by talking and calming whoever's upset," she said.
Salvation Army Napier Corps Officer Major Alister Irwin said there had always been a number of rough sleepers in Napier, but often when agencies reached out to them they were reluctant to seek shelter. There were a variety of homeless, rough sleepers, and people in transition, whose numbers could fluctuate for a variety of reasons. He didn't think the numbers of those on the streets were increasing.