Six families living in Rotorua emergency housing motels will move into new government homes on the corner of Malfroy Rd and Ranolf St next week.
But Housing Minister Megan Woods is still not committing to changing a public housing policy to ensure all homes built in Rotorua will only be used to house Rotorua locals.
Woods was in Rotorua on Thursday to see progress on the construction of 37 Kāinga Ora homes on the site. The first six houses - five three-bedroom homes and one four-bedroom home - are ready and will have families move in next week.
A Kāinga Ora spokeswoman confirmed the six families were living in emergency housing motels in Rotorua.
Woods said Rotorua's housing crisis would only be solved by building more homes.
"One of my frustrations of being here today is there's 37 houses planned for this site, that's not even making up for the number of houses that disappeared under the previous Government here in Rotorua."
She said that since 2013 Rotorua had experienced a surge of 9000 people seeking homes while only issuing 1500 consents.
"This Government is now working hard to help Rotorua fix this problem by pouring resource into the city."
She said there were 300 public homes under construction in Rotorua, or being planned, and out of the Government's 10,000 additional public homes, 209 would be in Rotorua.
"This is starting to unwind the damage done by the previous National Government who left Rotorua in 2017 with 44 fewer houses."
In response to the criticism, National's Rotorua MP, Todd McClay, told the Rotorua Daily Post he believed the minister was "trying to rewrite history and distract from the huge burden" the Labour Government had put on Rotorua by using motels for the homeless.
In his view: "What she should have said was that the Government will stop using Rotorua as a dumping ground for the country's homelessness problem and that only people from Rotorua would be put into these houses, not homeless from Whakatāne, Taupō or Auckland."
Woods told the Rotorua Daily Post in April that the Government would review its public housing criteria for Rotorua following an outcry from locals who learned out-of-town homeless could be housed in new Kāinga Ora homes.
While Kāinga Ora has said "most" people chosen for the new housing developments would come from Rotorua and "surrounding areas", its policy was that houses should be allocated to those most in need.
Woods said in April that she was asking for officials' advice on Kāinga Ora's policy, noting it had been in place for many years. Rotorua mayor Steve Chadwick said at the time it was her expectation that the policy would be changed.
Asked today by the Rotorua Daily Post how she was getting on with reviewing the policy, Woods said it would be dangerous to put up walls around regions in New Zealand.
She said she had to be careful there weren't "inadvertent consequences" by putting in place such a policy.
For instance, she said, it could prevent people who had lived in Rotorua previously and who wanted to return from being eligible and, on the other side, could stop people in Rotorua who wanted to move somewhere else from doing so.
When asked if that meant she would not change the policy, she said it was "not a yes or no answer".
The six new homes Malfroy Rd and Ranolf St have been built by Huntly company Builtsmart.
A further 19 will be finished by the end of the year and the final 12 will be ready early next year.
The second phase is in the planning stages and is expected to include a further 20 multi-storey homes.
Woods also visited Rotorua building company Exeter Homes - one of several companies nationwide contracted by the Government to quickly build homes off-site and truck them to their destination.
The Government has signed a contract with Exeter Homes directors Chris and Victoria Travis to build 12 off-site manufacturing homes - seven for Tania Cres in Rotorua and five for Ōpōtiki. There is a second order in the pipeline for about 12 further homes.
Exeter Homes employs 18 full-time staff members but, including locals, has a team of up to 30 locals working full-time for it, considering contractors.
Chris Travis told Woods at the meeting yesterday that his team was turning around a house a fortnight and he was keen to get more government contracts.
Correction: An earlier version of this article incorrectly spelled the name of the Huntly company building the homes on Malfroy Rd and Ranolf St as Buildsmart. The correct name is Builtsmart.