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She was voted in 7 to 5 in a vote against two-term deputy chairwoman Gretchen Robertson at the council's inaugural meeting in Dunedin today.
Cr Michael Laws has become the deputy chairman by the same margin.
Cr Laws initially stood for the chairmanship, but after a break in the meeting and discussion with some councillors, including Ms Hobbs, he dropped out.
He indicated after this he favoured Cr Hobbs for the role.
Ms Hobbs was voted for by Crs Alexa Forbes, Kate Wilson, Laws, Hilary Calvert, Gary Kelliher, Kevin Malcolm and herself.
Cr Roberston voted for herself and was supported by Crs Michael Deaker, Carmen Hope, Bryan Scott and Andrew Noone.
Cr Laws was voted in as deputy by the same group as voted for Ms Hobbs.
Ms Hobbs said she wanted "enormous progress" on water quality and access and to address mitigation and adaptation to climate change.
When staff went to speak to people in the community, councillors needed to be there, she said.
"I think there's a feeling out there that we are separate from the community."
She also accepted water problems were urban as well as rural, she said.
She would be able to work with farmers, providing they showed they were improving environmental practices.
When questioned whether she could use her contacts in Government to the benefit of the region she said: "I do have access".
"It's not just because I am a member of the Labour Party. It's because I'm not afraid of picking up the phone."
Cr Laws said he initially had no intention of standing for the chairmanship, but was not confident there would be change on the council otherwise.
The voters indicated they wanted change, he said.
"For the last six years the ORC has not covered itself in glory."
The organisation was too Dunedin-centric and there was a "dislocation" with the regions, he said.
It needed to relinquish control of public transport as he was "sick of discussing bus timetables" when there were environmental issues which needed focus.
Cr Robertson said the council needed to turn its reputation around.
It had been "mucking around" in the eyes of the community, she said.
"We're going to get on with doing things that make a difference . . . I will stand up for you around the table and I will do it in a collective manner."
There were times when she was "frustrated" at not being able to make traction with supporting catchment groups in a meaningful way.
However, the organisation was in the best situation it had been since she was first elected and on the right track, she said.