The first stage of the project would be led by Roopu a Iwi Trust, Housing NZ and the council, and would focus on informing the local community about the plan and seeking feedback.
Yesterday's MOU aimed to formalise the existing working relationships between the parties, which also included Horvath Homes, Te Taiwhenua o te Whanganui a Orotu, the Ministry of Social Development, Alexander Construction, Te Puni Kokiri and Te Taiwhenua o Heretaunga.
Maraenui ward councillor Maxine Boag said it signified "a commitment to make an overall plan for Housing NZ in Maraenui".
"It's a very exciting opportunity to make some positive, planned progress in Maraenui. This suburb really deserves a better deal."
Housing NZ area manager Andrew Cairns said the properties would be demolished "early next year at the earliest".
They were "either earthquake-prone or old, poorly configured and no longer fit for purpose".
"It makes sense to look at how the land can be used in a way that supports the community's vision."