Tears streamed down a Papamoa woman's face after the Tauranga City Council voted to press ahead with providing land for a village offering short-term housing for homeless families.

Residents filled the public gallery at yesterday's council meeting, shouting interjections to support their 112-signature petition that called on the council to either withdraw its Memorandum of Understanding with the Government or withdraw its lease for the land in Opal Dr.

The letter with the petition said the Ministry of Social Development had not assessed the effects of the development on neighbours and the resource consent had not been publicly notified.

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The first official notice that 19 transportable homes were to be trucked on to the 6500sq m site was a letter drop on the same day the development was announced. Each family would be housed for an average of 12 weeks until they found a permanent home.

A couple whose Summerland Cres retirement home will back on to the village, Grahame and Anita Smith, said they would be affected by the development.

"It's affecting our health, we are angry," Mrs Smith said afterwards as tears rolled down her cheeks.

She said they had suffered sleepless nights worrying about how the village would affect their lives. Security was their big concern.

They shared the frustration of other residents that there was nothing they could do to stop it happening.

Mr Smith said they understood that homeless people needed to be housed and that some families would be as good as gold, but not everyone. "It is the fear of the unknown, we just don't know."

On June 23 the ministry applied to the council for consent for the homes, the same day as the letter drop went out to residents.

Councillor Larry Baldock said there had been a lot of public concern that staff had decided to make it a non-notified consent application. He asked whether councillors could get involved or if they were prohibited under the Resource Management Act.

Council's Environmental Services manager Rebecca Perrett said the process was delegated to senior staff and once it had been decided to make it non-notified there was no legal ability to change that decision.

She assured councillors the ministry had not received special treatment. The underlying residential zoning and the conforming density of the development meant the council was limited to considering traffic matters. Although the assessment of the application was not completed, it would very likely be non-notified.

A Summerland Cres resident in the public gallery interjected, saying their lives had been turned inside out so the council got $100,000 a year. "We are really unhappy about it."

Council community services manager Philip King said the council would receive ground rent of $1 a year for the northern end of the block and development contributions of $20,000 a year for five years.

The main southern block would also be leased for $1 a year for 10 years followed by commercial returns for the next five years totalling $100,000. Development contributions totalling $120,000 would also be payable on the southern block.

Councillor Steve Morris said the rental was very minor compared with what the council could get from selling the land.

He then swung around in his seat to face the protesters and apologised for the slowness of communications with residents and how the application was affecting their most valuable asset - their homes.

"You deserved better."

He said it was not best practice to group 19 social houses together. The established practice was to pepper them around the community.

Mr Morris, who lived about 350m from the site, said his children would be affected because they went to the same primary school the children in the village would attend.

But like the rest of the council, Mr Morris said there was a huge social cost to people and their families from being homeless and he had to support the establishment of the village.

Councillor Kelvin Clout successfully urged the council to work with the ministry to address community concerns.

The ministry was planning a further 201 transitional housing units in Tauranga.