Residents and business owners are upset over a trial Housing New Zealand intensification project in Glen Innes becoming a "dumping ground for its poorest and most socially troubled clients".
At the same time, alarm bells are ringing over council plans to rezone other parts of Glen Innes for more intensive housing.
Locals say Housing New Zealand's descriptions of "community-led solutions" and building a strong, vibrant, healthy community have not met expectations.
Housing New Zealand owns about 55 per cent of property in the working-class suburb.
Former Auckland City councillor Sherryl McKelvie said she was under the impression that Housing New Zealand's Talbot Park would showcase a new design and concept for state housing and would be more selective with tenants.
The four-year project, costing $45 million, involves upgrading and expanding the rundown housing estate from 167 to 205 properties.
It is due for completion next year.
Ms McKelvie said Housing New Zealand was tenanting the park with the unemployed and sickness beneficiaries "and that doesn't make for a good community".
"We are sick of being the dumping ground for state housing."
She said it was time Housing New Zealand sold some of its property in Glen Innes, and New Zealand followed the Australian example, where government housing in any area did not exceed 30 per cent.
Bernice Hall, who works as a volunteer removing graffiti in Glen Innes, said there was nothing wrong with intensification in principal but in practice Housing New Zealand was tenanting Talbot Park with the wrong people.
She added the council also needed to fix basic infrastructure such as the sewerage system.
Housing lobby spokeswoman Sue Henry said Talbot Park was a toe in the water for Housing New Zealand and the council but the consequences were dislocation of existing tenants and "slumification" of the area.
A Housing New Zealand spokesman said the corporation was obliged to help priority A and B clients, who were most at risk or in serious need of housing.
These were generally people with social and economic difficulties.
The spokesman said Talbot Park currently had 110 tenanted properties, of which 38 were existing tenants and 72 had been re-tenanted. Of the 72, 43 were priority C and D clients with a moderate or low need of housing.
By the time the project was completed it would be a mix of two bedroom apartments suitable for disabled people, pensioner-type housing, larger housing for families and terraced type housing for small families.
The spokesman said it was not necessarily the case that priority A and B clients created a difficulty for the community. It was an indicator of housing need.
The council is due to announce details of the new areas for intensification in Glen Innes on March 20.
The plan will allow Housing New Zealand and developers to replace mostly single-dwelling properties with terraced housing and apartments of up to three storeys, and up to four storeys near Glen Innes town centre.
Residents rally against state 'slumification'
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