The new public houses, a mix of two, three and four-bedroom homes, will be matched to people on the Housing Register. Priority will be given to those in greatest need of a home and as it is public housing they are permanent homes.
All the homes will be insulated, carpeted and have curtains. The development plans also include parking for each home, a community room and a green space.
A section of the land on the corner of the site is not currently included in the plans while Kāinga Ora looks at different options to develop it in the future.
The Housing Register refers to housing applicants not currently in public housing who have been assessed as eligible for housing.
As of March 31, there were 23,688 applicants on the register nationwide, an increase of 45.3 per cent compared with the same time last year.
In Rotorua there were 690 applicants on the register, up 48.4 per cent from 465 at the same time last year.
Of these, 318 one-bedroom homes, 240 two-bedroom homes and 99 three-bedroom homes are needed. The remaining 27 need four or five-bedroom homes.
Of the 690 applicants, 666 are classed as priority A meaning they are considered at risk. The category includes households with a severe and persistent housing need that must be addressed immediately.
Homeless advocate Tiny Deane applauded the announcement.
He said it was good to see the Government coming on board to build more houses.
"One of my biggest things is getting our families out of motels, it's a key aspect we need to do. It's not just for our tourists, which at the moment are mainly Kiwis and a few Aussies, it's for the wellbeing of people getting out of motels."
Deane said he hoped the move would result in community buy-in.
"I think if people look at it as a positive if the community get behind this, it will work. The Government wouldn't have bought that land if they didn't think it was right," he said.
"If Kāinga Ora are going to build there, they will be healthy homes. There will be no shortcuts.
"I think that's brilliant. It's got to be a win."
Rotorua mayor Steve Chadwick said more housing was exactly what the community needed.
"These are the first small steps but it's heartening to see plans for a range of new, safe and healthy homes that will be suitable for local whānau," Chadwick said in a written statement.
"We all agree that the solution to the crisis in Rotorua is more residential development. Housing is a key priority for this council and we are working in collaboration with the Government and our Te Arawa partners to make that happen."
Rotorua Lakes councillor Merepeka Raukawa-Tait said she liked the sound of the development.
"I visited similar housing precincts in America, particularly around San Francisco, where housing is at a premium," she said.
"As the houses are for long-term occupation families will have the opportunity to become part of a community. They can make their houses homes, knowing the rental is affordable.
"There are many pluses when families have surety of tenure, including being able to undertake planning in other areas of their lives."
Rotorua MP Todd McClay said it was good to finally have an announcement about plans for the site.
However, McClay said it was worth asking why only 37 homes were being proposed when the plan for Ashworth Villas had included 50 houses.
"I notice 37 homes is fewer than the number of motel rooms [Kāinga Ora] have purchased and fewer than what was proposed by the original developer.
"I hope they can stick to their timeframe because Rotorua desperately needs more housing and the Government has already paid a lot of money for the land."
Kāinga Ora's Bay of Plenty regional director, Darren Toy, invited people to give feedback on the plans before resource consent was applied for.
"Our plans for 37 warm, dry and modern homes for the vacant land on Ranolf St and Malfroy Rd is great news for whānau and tamariki in Rotorua in need of a permanent place to call home.
"We're working with urgency and I'm pleased with the rapid progress we've made to now be able to share our plans for homes on this land."
Under the Public Housing Plan, Kāinga Ora is working to deliver about 190 extra public houses in Rotorua by 2024.
Kāinga Ora is requesting feedback on its plan before August 19.
A community session will be run on September 7 between 4pm and 6.30pm at Rotorua Intermediate on Malfroy Rd.
Kāinga Ora invites anyone with questions or feedback to attend this session.