UPDATED 12.40PM: A Maketu man is yet to enter a plea to arson after deliberately setting fire to towels at Tauranga Hospital overnight, causing fire and water damage to one room.

Shane Tamyhana Kelly, 22, appeared in Tauranga District Court this morning facing one charge of arson after the incident at the hospital's Acute Mental Health Unit on 20th Avenue just before 6pm Sunday.

Tauranga Hospital's Acute Mental Health Unit.

Judge Robert Wolff remanded Kelly in custody until October 13 after his lawyer Craig Tuck entered no plea on behelf of his client.

Tauranga Fire Brigade senior station officer Len Sabin told SunLive this morning there was an issue with somebody setting fire to towels by placing them on top of a toaster – causing 20 per cent of the mental health unit to become smoke-logged.

Bay of Plenty District health Board mental health and addiction services clinical director Sue Mackersey says one room of the facility sustained fire damage and other areas suffered some smoke and water damage.

Sue says the fire was quickly extinguished and all patients evacuated quickly and safely.

'However the unit is fully functional and is today operating on a business as usual basis.

'A man has been taken into custody in relation to the incident.”

Len says police, first on the scene, had already extinguish the fire when firefighters arrived, but much of the unit had become smoke-logged.

The fire did reignite but was never going to be too big a deal, says Len.

'I think the police who were on the scene [put the fire out] because they were having trouble with this person.

'Probably about 20 per cent of the facility was smoke-logged so we had to spend a bit of time there ventilating the place out. The smoke had caused a fair few problems.”

Tauranga Police would not comment on the matter.

Kelly will reappear in Tauranga District Court on October 13.