The Rotorua District Council set aside $30,000 a year for the next three years in the annual plan on the condition the trust met certain criteria to qualify for the funding.
In August last year, trust chairman the Rev Alex Czerwonka announced the trust had found a modest home close to the city centre which could accommodate up to seven people.
Plans were to initially open the shelter two or three nights a week.
At the time Mr Czerwonka said they needed to work with council staff as the shelter wasn't recognised under the District Plan but he was "pretty confident" about the site found.
However, trust members met council staff late last year and were told under the Building Act the property, 7A Pretoria St, wasn't classified to be used in the manner they wanted under the District Plan.
Rotorua District Council client support manager Paul Spurdle said the trust had been told they would need to have the property's use changed under the Building Act.
They will need to make improvements to it before its classification can be changed.
Those improvements included fire exits and access for people with disabilities, Mr Spurdle said.
The trust had not been back in contact since, he said.
Meanwhile, the council's Customer Services Committee met on December 6 and changed the funding allocated for the night shelter to allow trustees to buy bed nights in Rotorua for the homeless until a shelter was secured, Mr Spurdle said.
"This arrangement is a positive one for those less fortunate residents in need of a safe ... bed overnight. It means their needs can be met in the interim while plans for a long-term permanent facility continue to be explored."
Mr Czerwonka said the house was one of two in a duplex and a fire wall needed to go between them, as well as disabled access. But the hardest thing to deal with was there was no provision in the District Plan for the shelter, he said.
He hopes emergency accommodation like this can be included in the District Plan in the future.
"It's disappointing. There is no provision for this type of activity in the District Plan." Until this happens, the trust was focusing on supporting Rotorua's homeless into accommodation, Mr Czerwonka said.
Meanwhile, night shelter manager Andrea Goldstone said they would have to give up the Pretoria St home as it was going to be too expensive for the trust to bring it in line with council requirements.
"We are going backwards at the moment. The house we hoped to acquire as a night shelter for the homeless is being held up by council red tape.
"With all these hiccups we can't do it," she said.
Mrs Goldstone is now seeking members of the community to offer night beds to some of the needy with nowhere to sleep.
If you would like to offer a night bed to a homeless person please call or text Andrea Goldstone on (mobile) 027 257 9005.
