The new owners of a motel that overlooks millions of dollars of new investment in Rotorua says it's been thrown a "curve ball" with news it's not likely to be allowed emergency housing clients.
The Ministry of Housing and Urban Development has confirmed to the Rotorua Daily Post it hasn't approached the Ambassador Thermal Motel to be one of Rotorua's new emergency housing contractors.
A Hamilton-based trio bought the lease on the motel, on the corner of Whakaue and Hinemaru Sts, last month and hoped to turn it into an emergency housing provider, similar to how it is running their other motels in Rotorua, Hamilton and Auckland.
News of the sale sparked concerns from neighbouring businesses and residents.
The week after the sale went unconditional, the Government announced plans to change emergency housing in Rotorua by specifically contracting approved motels in a bid to clean up some of the issues plaguing the city.
Currently, any motel can house emergency housing clients.
However, the Ministry of Housing and Urban Development has confirmed to the Rotorua Daily Post the Ambassador Thermal Motel is not one of the motels it has approached in the past two weeks to take on a contract.
Mark Nolan, who is one of the Ambassador Thermal Motel new owners, told the Rotorua Daily Post they had emailed the ministry three times to express their wishes to be given a contract but had not heard anything back.
"There has been no communication from their side. It must be because they are in the middle of changing things but we haven't heard a peep out of them ... All we have had is a wall of silence. They (the ministry) have not said we will not be selected."
Ministry of Housing and Urban Development engagement and communications manager Dennis de Reus said there was no formal application process.
He said both his ministry and the Ministry of Social Development were approaching potentially suitable motels directly.
"The Ambassador motel is not one of the motels we have approached."
The motel's new owners were also having to deal with a public backlash about their initial plans, with nearby businesses and residents worried about the potential clientele they could attract.
Among the fears expressed were safety concerns in the wake of what residents were going through near Fenton St emergency housing motels.
Others said having an emergency housing motel directly opposite the new lakefront development and Pukeroa Oruawhata's new Wai Ariki Hot Springs and Spa was not a good fit.
Nolan said for now they were trying to make the Ambassador Thermal Motel profitable by selling rooms to domestic and corporate visitors and were doing up the internet and phone systems in the rooms.
He admitted it was a struggle and they probably wouldn't have bought the motel if they knew how things would have turned out.
"We have to take it on the chin and carry on. We will have to continue to monitor the situation really."
He said issues with getting ministry approval and a "political backlash" from residents were not something that had cropped up in their due diligence.
"It was a curveball. The whole thing was a shocker and to get introduced to a more political landscape."
He said thankfully for them their other motel, Fernleaf Motel on Toko St, which they bought on April 1 was already housing emergency housing clients and was "propping up" the Ambassador Thermal Motel.
When asked if they would consider selling the Ambassador motel, Nolan said they were still hoping to get a contract with the Government down the track but would do the best they could in the meantime with other guests.
Nolan admitted running emergency housing motels was profitable but said there was a "tail end" to the profits.
"The long-term damage to the rooms means we will have some really high refurbishment bills. Unfortunately, it looks like we are sitting on a good pile of it (money) right now, but we have to fix up the rooms when MSD drops off ... In a way, it's short-term gain."
John Norton, who manages Lime Cafeteria on the corner of Fenton and Whakaue Sts, said he was happy the Government wasn't looking to put emergency housing clients in the nearby Ambassador Thermal Motel.
"That's good news for Rotorua, not just for us."
He said despite the denials from Government agencies, he believed it was clear people had moved to Rotorua from outside areas for emergency housing.
"It's just not good for the city and it's making the CBD feel unsafe. We don't want that. We want people to feel safe and enjoy the experience of coming out."
Aura Accommodation owner Nick Fitzgerald said he was pleased the new owners' plans to house emergency housing clients hadn't eventuated so far.
"It means there will be more room for tourists coming to Rotorua and this weekend being Queen's Birthday is a good example."
Fitzgerald said it was important the Ministry of Housing and Urban Development carefully considered which motels they would contract.
"There should be something in the criteria that they are listening to the community and they look at it from a big Rotorua picture where these places are located so that everyone coming to our town and those who live here have a good experience."
Pukeroa Oruawhata general manager Peter Faulkner did not want to comment.