Christchurch city councillors have decided to borrow up to $25 million in order to build 85 new social housing units.
The trust also planned to build a further 54 units, and over time they will repay the loan, including interest and council costs over a 25-year period.
Mayor Lianne Dalziel said it was key to come up with a sustainable funding solution to the issue of housing Christchurch's most vulnerable people, especially during the times of Covid-19.
"This unlocks government money now and is critical to get anything done in this space, so it's vitally important we unlock the door for OHCT," she said.
Deputy Mayor Andrew Turner voted in favour of the decision because aside from providing more social housing, it would create more job opportunities for smaller and local building contractors.
"There is no risk to ratepayers, and it's an example of where we can support the trust to be doing work aligned with our overall strategy; but work we couldn't do ourselves," he said.
The transaction will be rates neutral therefore the trust will have to fund the money needed to meet the city council's borrowing and administrative costs without any ratepayer funding.
Although they supported the need to house those who need it most, city councillors Catherine Chu, James Gough, Aaron Keown and Sam MacDonald voted against the move.
Said Cr Gough: "It may be rates neutral, but it increases our borrowing considerably. One thing we need to be aware of is that no one knows where this [outlook for Christchurch] is going to end up.
"One thing we can be certain of is that the unexpected will arise and it's incredibly important, if not a duty, to be prepared for that the best we can."
The decision follows the temporary halt to the installation of heat pumps in hundreds of social housing units managed by OCHT last month.
As the country moves into alert level 3, the trust was now able to resume operations next Tuesday in time for winter and install the remaining 569 heat pumps in priority homes.
