The claim has not yet been substantiated, police said.
Police remain at the scene on Webb St, Wellington.
A Herald reporter at the scene said at least 10 police cars, one fire engine and one ambulance were present.
They said they had heard “three loud bangs from the building”.
RNZ reported that armed and regular police are at the scene.
The outlet said the building of interest is 92-96 Webb St, a transitional housing facility.
Several police officers are entering the building and refusing to let tenants in, RNZ reported.
A resident who has been living in the building for nine months told the Herald he has no idea what is going on and that police have not told him anything.
RNZ’s reporter on the scene said negotiations with a person inside the building are being carried out by police.
Officers have turned back parents coming to collect their children from a nearby Barnardos facility, according to RNZ.