The Lava Bar will stay open after a proposal by homeless supporter Tiny Deane to turn the area into a complex for elderly with nowhere to go fell through.
An Auckland property investor had intended to buy the lease for the site, which included the popular nightspot and neighbouring X Base Backpackers, with the intention of leasing it to Deane's charitable trust, Visions of a Helping Hand, and Whanau Ora.
Deane was hoping to turn the backpackers into accommodation for homeless elderly while Whanau Ora was intending to turn Lava Bar into a subsidised medical centre that would help those in need.
However, news of the proposal was met with public backlash and an online petition was started to stop the deal, resulting in more than 3600 signatures.
Among the concerns were the site, on the corner of Arawa and Ranolf Streets, was seen as an entrance to the central city for northern visitors plus many felt it was too close to nearby Rotorua Primary School.
Deane and the investor confirmed to the Rotorua Daily Post yesterday the deal, which was set to go through on March 31, had fallen over.
Meanwhile, Deane said there were no immediate plans to set up the housing and Whanau Ora complex anywhere else as land and other investors were too scarce.
When asked if he was disappointed he said: "I am sort of disappointed. I am disappointed for the people who have missed out to go into the backpackers because that was purely for the elderly.
"That could have been, in my eyes, big to help the town for the elderly who are still couch surfing. I'm still getting calls, I got two today from people in their 70s who need somewhere to go but they've got nowhere now."
When asked if he could understand the community's concerns, Deane said people were scared because of the way the media and social media painted it as being a "homeless hub". He said people thought it was going to be like his homeless shelter operation on Pukuatua St, which closed as a result of lockdown.
"We had no intentions of putting rough sleepers in there, just the elderly. They are the ones who have more or less built this country and worked. They are retirement age and they have nowhere to go and I'm disappointed I've let them down and haven't been able to pull this off.
"I had an investor there and it could have worked ... It is what it is and I'll just carry on doing what I'm doing."
Meanwhile, Lava Bar manager Vanessa Martin said she was thrilled to hear the proposal wasn't going ahead.
She said it would be good news for her locals and the history of the bar, which had been a popular nightspot in Rotorua since it opened in 1996.
"We're happy we're not closing and keep your eyes out for a 'staying alive' party."
Rotorua Primary School principal Fred Whata said he was "absolutely happy" to hear the proposal was off the cards.
"The health and safety and wellbeing of our students aged 5 to 13 will be safe for those travelling to school without having a negative element."
Whata said a lot of the fear came from not knowing the full details.
"We didn't have a clear indication of what the specifics details were and it makes the general community feel uneasy given some of the clientele we have seen coming to Rotorua and living under that guise."
Whata said it was a nationwide problem but he called on some drastic changes to be made to improve the situation including a stop to "handouts" which he said was "enabling" their behaviour.
Rotorua Chamber of Commerce chief executive officer Bryce Heard said its members would be thrilled.
The chamber did a survey when news broke about the proposal and, while 85 per cent of members wanted to support the homeless, particularly those from Rotorua, 95 per cent didn't want to see homeless people housed in the backpackers, Heard said.
"There is a lot of nervousness especially with what looks like an explosion of the number of people who are homeless in our city."
Whanau Ora director George Ngatai said his organisation still intended to set up a general practice in Rotorua at some stage. However, he said all processes needed to be worked through properly to ensure it got community support.
"Anything to support the community is a good thing but we have to work through the processes rather than storming ahead. In this case it was quite challenging."