Rotorua is one of six "homeless hotspots" in New Zealand, with one business leader saying the issue is "terrorising the city".
It comes as the Rotorua Daily Post revealed a Rotorua Lakes Council plan to remove homeless people from its parks and reserves if they posed a threat to themselves, others or the environment.
A Ministry of Housing and Urban Development spokesman said the "hotspots" were six areas identified for focus where homelessness was an "increasing and serious issue".
They were Auckland region, Wellington region, Northland, Napier/Hastings, Hamilton and Rotorua.
The locations were not ranked and it did not mean there weren't high levels of need in other areas, the spokesman said.
The hotspots were identified based on several factors, including advice from the Ministry of Social Development and the Ministry of Housing and Urban Development's regional experts and demand for emergency housing special needs grants.
Each hotspot had a "unique set of challenges to address homelessness and housing supply".
Property developer Ray Cook said homelessness was "terrorising the city".
Being a homeless hotspot did not have good implications for Rotorua, he said.
"From a tourism perspective, it's not good at all."
Some homeless people socialised on "main corners" and caused "all sorts of havoc".
"You feel sorry for these people … but somebody needs to do something."
Cook believed the onus had been shifted back on to the council when it was a "government problem".
Love Soup co-founder Ellmer Peiffer said the homeless hotspot description was fair but believed the problem was worse than it appeared.
He said the government was doing its best with the information it had, but the hidden homeless - people sleeping in garages, "couch-hoppers or overcrowding homes, for example - were likely not counted.
Love Soup helped feed the homeless in Rotorua five nights a week.
Peiffer agreed some homeless people were "trouble-makers" but believed many of those "being a menace" were not local.
He said housing needed to be "fast-tracked" as that was the main problem, but creative short-term solutions needed to be found "while long-term solutions are being implemented".
In a written statement via the council communications team, Rotorua mayor Steve Chadwick said the town's critical housing shortage and homelessness was a fact.
The hotspot status acknowledged Rotorua's "urgent need" and ensured it was "on the radar" for support and programmes like Housing First.
She said both ministries and other stakeholders were "giving valuable input" into the council housing plan, which had the Government's support.
She said council aimed to be an "enabler" for housing through the District Plan, infrastructure investment and working with landowners and developers, as well as advocating for investment from central government.
Housing shortages and homelessness weren't unique to Rotorua, and it was important Rotorua remained a desirable place to work, live, invest and visit, she said.
"So our efforts there need to continue alongside development of our housing plan."
Destination Rotorua chief executive Michelle Templer said there were many people working in tourism in the town who worked hard to maintain and protect its reputation as a "great place to visit".
"We would all like to see a solution found as soon as possible."
Rotorua MP Todd McClay said the Government was using Rotorua as a "dumping ground", using its many motels as places of emergency accommodation for homeless people.
Many people he spoke to were concerned about the scale of the issue.
National Party social housing spokesman Simon O'Connor said the number of people on the public housing waitlist was "indicative" of the Government's failure to combat housing and homelessness.
The Labour Government was "quick to blame" the previous National Government for housing and homelessness shortcomings, which was "drawing a very long bow".
Waiariki MP Tamati Coffey said he was disappointed National was throwing "needless negativity from the sidelines" without offering solutions.
The Labour Government had "over-delivered" on state houses, with 2300 under construction, of which many were in Rotorua.
"The records show that if the previous Government had been building at our pace, rather than selling state houses off, we wouldn't even have a waiting list now."
Coffey said homelessness and tourism was "not an and-or-situation".
"We can support the growth of local business … while creating new opportunities to respectfully house those in need."
The Government was committed to moving people out of hotels and "into appropriate housing" and acknowledged the work of iwi and council to "ensure we get things right".
"However, we realise a one-size-fits-all strategy will not work for Rotorua.
"Rotorua's classification as a homelessness hotspot will ensure a tailored strategy to the specific needs of our community is developed."
He would have "more to say" on the programme of work "in due course".
A geothermal homelessness hotspot
Ministry of Social Development regional commissioner Mike Bryant last week said there were four dedicated case managers in Rotorua for supporting people with emergency housing, as well as two "intensive housing case managers", and plans for another two.
The ministry was working with the council on a Rotorua Housing Strategy which included addressing homelessness and would be informed by the National Homelessness Action Plan, led by the Ministry of Housing and Urban Development.
Ministry of Housing and Urban Development figures showed that in the Rotorua district in the quarter ending September 30 2019, 3381 emergency housing special needs grants were approved, at a cost of nearly $4.5 million.
Tauranga City, 1.8 times the population of the Rotorua district, approved 1135 grants at a cost of just under $1.3 million.