The council's move, prompted by requests from iwi and tangata whenua groups, has been welcomed by experts in papakainga development.
Victoria Kingi, company director of Papamoa-based Papakainga Solutions, said papakainga was essentially collective housing on Maori land.
"Often the Maori land trust provides the land to build on at no cost to make it affordable for whanau in need."
She said there were many barriers to building papakainga, including banks being less willing to provide loans when multiple-owned land was involved, and many Maori not earning enough to service a mortgage.
"The average total household income for Maori whanau is around $30,000 to $25,000 per annum so the ability to service lending is limited, certainly the ability to buy in the general market is prohibitive."
Kingi said people moving into papakainga houses tended to come from within the community, creating no additional infrastructure pressure, and were less likely to move as they had a spiritual connection to the land.
She applauded the council for its willingness to consider a new approach, though said it had been slower off the mark than other councils.
The Western Bay had a policy for years allowing papakainga developers to apply to reduce financial contributions if they met certain conditions, Kingi said.
Tauranga City Council has a policy allowing approved developers to apply to defer development contributions, usually paid when a building consent is issued, a maximum of six months.
Developer Peter Cooney of Classic Group said that any move to encourage the building of affordable housing and collaboration between groups involved in housing developments were a good thing for Tauranga.
"Any stimulation of affordable housing has got to be seen in a positive way. There is a massive shortage of affordable housing in New Zealand, and Tauranga is going that way too."
Cooney said there was "no silver bullet" for housing affordability, but increasing collaboration between iwi landowners, councils, banks and private developers was a good move.
Te Ururoa Flavell, former Minister of Maori Development, said papakainga developers had "a vested interest in getting it right" as they were usually looking after their own people and had a deep connection to the land.
Life in a papakainga
Ebba Te Tua moved into a brand new two-bedroom unit built especially for older people in the Mangatawa Papakainga in December 2011.
Seven years on, the 83-year-old is still raving about her beautiful, warm, safe home with the "million-dollar views" overlooking Papamoa and out to sea.
Te Tua doesn't own the house, but is a shareholder in the trust that owns the houses and the land the papakainga sits on.
The properties are leased to Housing New Zealand, which tenants them with priority given to Mangatawa kuia and kaumatua, who pay a "modest rent" Te Tua said.
She is related to all of her neighbours.
"We're whanau - we're a community and we take care of each other."
When she hears of other elderly in Tauranga struggling to find a home that suited their needs as they aged, Te Tua said she feels "very lucky".
"I think they could do with heaps more of these."
