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The Dunedin city councillors debated the issue at the first day of deliberations on the 10-year plan and voted 8-7 in favour of the motion.
Council flat rents are set at $135 per week, which is $15 short of the amount needed for the council to break even on the properties.
Yesterday’s decision means the $15 shortfall will be met by ratepayers for the next year.
A $15 subsidy for the council’s current stock of 936 units would cost $730,000 per year, equivalent to a rates increase of 0.45%.
Cr Jules Radich said $15 was a significant increase in rent, but tenants were not the only ones facing increased costs.
"[The higher rent] is a 10% increase, but that’s exactly the same increase we are looking to impose on ratepayers."
Cr Christine Garey said councillors needed to think about the most vulnerable people in the community.
"For many of those people $15 would be an extraordinary amount of money to come up with every week," Cr Garey said.
Cr Sophie Barker had initially been on the fence but was convinced by the debate to support the motion.
Feedback from the consultation process had been in favour of the proposal, 59% of submitters having agreed with the concept.
Two online polls were both in favour of the subsidies.
Voting for the motion were Crs Barker, Garey, David Benson-Pope, Marie Laufiso, Jim O’Malley, Chris Staynes, Steve Walker and Mayor Aaron Hawkins. Against were Crs Radich, Rachel Elder, Doug Hall, Carmen Houlahan, Mike Lord, Lee Vandervis and Andrew Whiley.
Cr Staynes tabled a follow-up motion which proposed to restrict the maximum rates contribution towards community housing rents to 10% of the total rent.
The motion passed by 10 votes to five. Crs Elder, Lord, Radich, Vandervis and Whiley were the dissenting voters.
Councillors considered other aspects of community housing yesterday and decided to reserve $20million over the next 10 years, to build new units. This equated to 80 new units.
Cr Walker said Dunedin was the region with the second highest amount of community houses for its residents, and this was an opportunity to further reduce the housing waiting list.
"This is our chance to continue ... making an effort to push the ambulance further up the cliff, beyond halfway."
The vote passed 11 votes to four, with Crs Houlahan, Lord, Vandervis and Whiley voting against.
Residents had been asked whether the council should prioritise people aged over 65 for community housing.
At present housing is prioritised for those aged 55 and over.
Submissions were received in favour of prioritising other applicants including those from disabled, Maori, and Pasifika residents.
Councillors did not make a decision but asked staff to review their waiting list criteria and report back in September.
Deliberations are scheduled to run daily and finish no later than close of business on Friday.