Three applicants from the community were short-listed after the council asked for expressions of interest to operate a service, councillors were told this week.
These would be compared with what the council might be able to provide in-house.
The council appears set to decide on March 25 if a service will be delivered in-house or by an external provider.
In a report for a meeting in November last year, the council said an estimated 267 people in Otago experienced severe housing deprivation in 2024.
"These individuals are living without shelter, sleeping rough in cars, tents or makeshift structures.
"This number reflects a growing crisis that is increasingly visible . . . and which current services are not adequately resourced to address."
Council staff also said there was a critical gap in supported accommodation for young people.
The council voted 8-7 last year to ask for expressions of interest about providing a housing outreach service.
Tenders closed at the end of last month.
An update was provided at a council meeting this week after a question from Cr Andrew Simms.
Hauora health and wellbeing portfolio councillors Marie Laufiso and John Chambers could be briefed next week, council community and strategy manahautū (general manager) Nicola Morand said.
