He said other potential partners such as iwi trusts, who owned fewer units, also had the same problem. By partnering together they could form a "critical mass to provide wraparound services".
"At the moment ... we collect just enough rent to look after our houses just well enough and we provide just a level of social services or care that's not actually doing anything to address the sort of wider issues across our community."
He said the business plan would not only look at pensioner housing, but wider issues such as emergency housing.
"This is an important opportunity, an important vehicle to provide some sort of solution to some of the housing problems in the district."
Earlier in the meeting, councillor Charles Sturt said in his view the "jury was out" on whether it would be the best way of increasing affordable housing in the community.
"I will wait until I have seen the business case."
Council chief executive Geoff Williams said a community housing provider would be better placed to meet the broad range of needs tenants had.
"Social housing is being used by some of the most vulnerable people in our community."
He acknowledged Rotorua had a real issue with housing.
"How do we make sure that young families are able to access good quality housing? That's something this type of housing provider can start addressing."
Councillor Raj Kumar pleaded for the issue to be dealt with urgently.
"It's a crisis I believe out there," he said.
Committee chairwoman, councillor Merepeka Raukawa-Tait, questioned whether the council should be in the business of being a landlord at all, noting it "wasn't overly good at it".
"Maybe we should look to a partner to take it over altogether."
Senior policy adviser strategy Rosemary Viskovic, who prepared the report, responded that could be what happened if the council simply leased its properties to a community housing provider.
