Motels in Rotorua have earned more than $3.3 million in three months to put up homeless people but some businesses are concerned the city's tourism reputation is taking a battering.
Figures from the Ministry of Housing and Urban Development show the bill for Rotorua motels from April 2019 to June hit $3.36m in 2410 emergency housing grants up from $2.27m and 1852 emergency housing grants in the first quarter of the year.
Data also reveals over the same timeframes the waiting list for state houses has jumped from 240 to 305 applicants with one social agency describing the housing crisis as an ''epidemic''.
Ministry for Social Development clients are staying in more than 20 motels, backpackers and lodges in Rotorua.
Visions of a Helping Hand founder Tiny Deane said by his estimation 250 motel rooms in Rotorua were available for homeless families and children and one room could cost $1500 a week.
He said it was affecting the tourism industry as ''people don't want to stay in our motels anymore because they see homeless and they see them doing drug deals''.
''That is the hard facts, these are the people we are dealing with and we are not going to solve the problem overnight.''
But Deane had hope and said agencies including the council had rallied together.
Deane was also partnering with developers and investors to build more homes in the city.
He anticipated 30 to 40 could be built before Christmas which would help the 46 mothers and their children that were living in Visions of Helping Hand homes - then Deane wanted to clear out the motels.
Salvation Army Rotorua Lieutenant Kylie Overbye said living in a motel long-term was stressful and could contribute to diminished mental well-being.
She said the housing situation was ''heartbreaking'' as it was extremely difficult for people to find suitable accommodation.
''They're already constantly dealing with social isolation and trying to deal with their personal issues, and then on top of that when they end up in the position of not knowing where they and their family will lay their head tomorrow or the next day there is an overwhelming dread of uncertainty that comes over them.''
The Salvation Army had five transitional houses which were full of families and was in the process of acquiring six more.
Destination Rotorua chief executive Michelle Templer said members of the Rotorua tourism industry were concerned about the impact on Rotorua's perception.
But it was encouraging to know ''there are a number of discussions under way focusing on how Rotorua responds to the housing challenge''.
There were 115 commercial accommodation businesses in Rotorua, she said and ''while access to emergency housing is a national issue, it's not good to see anyone having to live in a motel''.
As at June 2019, there were 115 commercial accommodation businesses in Rotorua.
Rotorua Association of Motels chairwoman and secretary Shelley Hobson-Powell told NewsHub earlier this month she has been assaulted by guests at her motel.
A long list of illegal goods, including a homemade bong, a weapon and synthetics had been discovered in the rooms, as well damage.
Hospitality New Zealand Bay of Plenty regional manager Alan Sciascia said the problem was compounded by people moving to Rotorua and Airbnb.
He said some motels would have made a business decision to take MSD clients as it had families in desperate need of accommodation.
Meanwhile, in Rotorua, there were nearly 1000 homes listed on Airbnb with a lot of homes being converted in locations which previously provided rental accommodation. '
Deputy mayor David Donaldson who was the economic development chairman said the council had been grappling with the housing shortage for some time and was working with Housing New Zealand and developers ''to enable quality housing to be built as quickly as possible''.
Unfortunately ''it is what it is and we are a growing population and rental properties are hard to come by''.
Ministry for Social Development regional commissioner Mike Bryant acknowledged motels were not a long-term solution or ideal for someone with nowhere to live,
''We're trying to help but if it's between sleeping outside, in a car, garage, an overcrowded situation or a motel, we consider the motel preferable. At any given time, there are many families often with high needs and complex situations, waiting for public housing.''
''We know the housing shortage is making life tough for some people all over the country – the Bay of Plenty is no exception.''
A Housing New Zealand spokesman said it owned 652 properties in the Rotorua District and 97.7 per cent were tenanted.
He said the public housing provider had recently invested in six new, one-bedroomed, transportable homes in the city and had a long, positive and productive working relationship with the Rotorua Lakes Council.