The Christchurch City Council is scrambling for ways to raise money to maintain its social housing flats after backing down on a 24% rent increase.
At a special meeting on Thursday, the council decided not to appeal against a High Court ruling that its move to increase rents by 24%, which took effect in July.
The court ruled the council failed to follow an appropriate decision-making process.
The council has to find new ways of raising the money, which it says is badly need for maintenance on the 2,500 flats.
It indicated the preferred option is to increase rents next July by 14%, though it could also be as low as 5.8%. The council has committed to a full consultation process before any future rent rises.
City Councillor Yani Johanson said he cannot comprehend why a 14% increase would be needed, and described it as a rushed decision.
"We're just making a decision on the preferred option, but at the end of the day, I believe 14% is an extreme option."
Christchurch Mayor Bob Parker made a public apology to the city's social housing tenants for the controversial rent rise.
Mr Parker said the council got the process wrong and he is happy it is not appealing against the decision.
"I want to say to the ratepayers, the residents and the citizens of Christchurch that I'm sorry. We got the process wrong. We were wrong, and therefore, we should admit that, and say we're sorry."
Social housing tenants will be refunded any extra rent they paid, plus 7.5% interest.