Wellington Mayor Andy Foster will meet with the Housing Minister at the end of this month in an ongoing battle for a critical social housing subsidy for the city's "bleeding" portfolio.
City Housing's current trajectory is insolvency by June 2023. It has 1927 properties and 3200 tenants.
Wellington City Council wants councils to have access to the Government's Income Related Rent Subsidy (IRRS), under which low-income tenants pay no more than 25 per cent of their income on rent.
If City Housing could have accessed the subsidy from the beginning of this year for all existing tenants, it would have an operating surplus of $5m instead of a deficit of $6m.
A date has been set for a meeting with Housing Minister Megan Woods on August 24.
Those attending will discuss City Housing's financial position and the broader issue of increasing housing supply in Wellington.
Foster told the Herald the council was housing some pretty "hard up" people who were doing it tough.
"They are paying more than the equivalent tenants in Government housing or Community Housing Providers because of this discrepancy."
At the moment, the subsidy is available only for new tenants going into Kāinga Ora or Community Housing Provider social housing.
As many as three-quarters of City Housing tenants pay more than 35 per cent of their income on rent.
Foster said the operating deficit was only going to increase.
"It's going to get dramatically worse over a period of time as we exhaust reserves and plunge into the red."
Furthermore, the council is facing a $446 million bill over the next 10 years for upgrades and routine asset maintenance and renewals.
Foster said the council was unable to make the social housing arm sustainable on its own, without putting a level of cost on the ratepayer which would be "unacceptable".
The council was working hard to increase housing stock in the city through projects like its apartment conversion scheme, Te Kāinga, Foster said.
It's going so well the council has set a target of having 1000 new units either delivered or under contract, over the next five years.
"We are making a pretty significant contribution to get more housing in our city the bit that's the problem is the social housing - we can't bridge that gap", Foster said.
Woods wrote in a letter to Foster, tabled at a committee meeting last week, that she has directed Ministry officials to undertake analysis of potential options to support councils facing financial challenges in continuing to provide social housing.
"Given the risks for council tenants and implications for Wellingtonians that need housing support, the Government is committed to working with WCC to find ways to ensure this housing is retained as affordable rental housing."
But the Government was focused on using the IRRS to increase new build public housing, Woods said. In the Wellington region between 470-690 public housing places and 160-170 transitional housing places are planned.
It has been made clear by Ministers that diverting IRRS funding to councils would mean reducing the Government's housing build programme.
Last week it was revealed the estimated cost to the Government of extending the IRRS to Wellington City Council social housing was about $100 million over four years.
Labour councillor Fleur Fitzsimons, a long time advocate of the council gaining access to the IRRS, said that money would be an "excellent" investment for the Government.
"I think it would be money well spent and it would make the lives of tenants in City Housing across Wellington much better overnight.
"It would also relieve the financial pressure facing Wellington City Council and resolve the operational deficit facing City Housing, which would mean council could focus on the urgent renewals and upgrade work as well as building more houses across Wellington."
Fitzsimons said the apartment conversion scheme could be used to find the "sweet spot" between solving City Housing's financial woes and building more houses.
"We need to consider all options and that means looking at whether the Te Kāinga programme could include some social housing."
Councillor Diane Calvert, who has also fiercely advocated for access to the subsidy, said she was pleased a meeting with the Minister has been secured.
She said the current process was more formalised than previous dealings.