A buyout offer will be put to affected Bella Vista homeowners and legal proceedings have started against the developer, says Tauranga City Council chief executive Garry Poole.
It's a step forward in the ongoing saga in which 21 houses in the Tauranga development were deemed to be dangerous and were evacuated in March.
Since then it's been revealed the houses, some which had code compliance certificates, were shoddy and unsafe.
Garry says council are prosecuting the "developer" as there are "clear breaches of the building act".
"There's evidence that fundamentals of the building were not being complied with."
Garry says he accepts that council inspectors should not have missed these lapses in the Building Act.
"That's why we are in negotiations with homeowners. When a developer has not gone under about 80 per cent of responsibility is on them and 20 per cent is with the council.
"They still have responsibility."
Developer Danny Cancian has challenged the council to take him to court.
"I want to go to court," he says.
"I welcome the chance to expose the council for what they are in a courtroom"
Homeowners have repeatedly said that market value is the only outcome they will accept but Poole shot down this idea.
"It's [the offer] is not market value," he says. "It's going to give them back to what they spent plus some other kind of incidental costs.
"We believe this is the appropriate settlement."
Garry says they received legal advice which suggested their proposal would be what a court would order if a case proceeded.
He says the buy out costs would be worn by insurers.
"One of the reasons this took a while is we had to take our insurers with us."
Homeowner Lee Konowe says it's too soon to comment fully, but he wasn't happy with the deal.
Konowe is one of two property owners who have already filed legal action against council with the other 19 property owners still waiting for the council offer.
"If this is the offer council provides then existing class action suit may find itself with several new members."