The Boulevard Motel on Fenton St. Photo / Andrew Warner
Government landlord Kāinga Ora has paid $8.1m for a Rotorua motel unit to house homeless people, raising the eyebrows of local real estate agents who say it is well above the capital value (CV).
This week the Government announced its housing arm Kāinga Ora was in the final stages of buying the 30-unit Boulevard Motel at 265 Fenton St for $8.1m.
The Ministry of Social Development has no record of the motel previously being used for emergency housing. It will be turned into transitional housing for 80 people.
In the announcement, the Government said the “warm and dry” short-term housing would be managed by Wera Aotearoa Charitable Trust and provide residents with 24/7 wraparound support.
It said the 0.66ha site also offered “longer-term redevelopment potential” for more public housing in the region.
However, the $8.1m price tag has raised the eyebrows of local real estate agents who say it was well above the CV.
A local real estate agent told Newstalk ZB political editor Barry Soper the motel covered six property titles, collectively valued at $4.3m.
The Herald was able to confirm the CVs of four of the six titles covering just over 0.5ha, collectively valued at just under $3.5m.
Kāinga Ora said on Wednesday night that the price was in line with an independent market valuation. A spokeswoman said a fuller response would be available on Thursday morning.
The purchase comes as the city grapples with rising housing need and homelessness.
There are 688 applicants on the social housing waiting list, up from 240 two years ago and 464 last year.
Kāinga Ora Bay of Plenty regional director Darren Toy described the purchase as “good news” for those in need of housing.
“Around 80 people and families, will soon have a warm, dry and safe place to stay, including a fenced play area and green space, following upgrade work to convert this property.”
Toy said the location was also convenient for long-term public housing because it was close to transport and services.
Residents were expected to start moving in from late September.
Under the Public Housing Plan Kāinga Ora was working to deliver about 190 extra public housing places in Rotorua by 2024.
Labour list MP for Waiariki Tāmati Coffey welcomed the news of the purchase. He believed it would be a “game-changer” for more than 80 individuals facing housing struggles in Rotorua.
“It is going to make an immediate difference for people in our community.
“Unfortunately this is the situation that presents itself, and there is no magic solution. We need to come up with our own innovative solutions.”
Coffey said wraparound support from Wera Aotearoa Charitable Trust in the motel would play a key role in supporting those with mental health and addiction issues.
Meanwhile Rotorua MP Todd McClay said the purchase was “deeply disappointing”.
“The Government should not be owning motels, they should be owning houses. They are turning Rotorua from a tourist town to a homeless town.”
He believed a motel could not be a transitional home, and the $8.1m should be used to build houses.
Rotorua district councillor and Whānau Ora chairwoman Merepeka Raukawa-Tait said she was pleased housing solutions were being explored in Rotorua, but said motels weren’t a “long-term solution to public housing problems”.
“There is a real danger they will become the default position for housing woes. I don’t believe our main street should be the front window of public housing, also social service delivery.”
Building was expected to begin by the start of next year.
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