The mayor of the Kaipara District has apologised to ratepayers over a multi-million dollar rating blunder.
Property owners in the coastal community of Mangawhai challenged the council last year over the way it levied rates for their new sewerage system and borrowed to meet cost blow-outs.
A review done by law firm Simpson Grierson has confirmed that the council failed to comply with the statutory requirement for setting the rate.
The mayor, Neil Tiller, has admitted the council got it wrong and has apologised this week in a letter to every Mangawhai ratepayer.
But he says the errors do not detract from the fact that costs were incurred for the sewerage scheme and the council needs to be able to rate to fund them.
The Mangawhai Ratepayers' Association says the mayor's letter is an admission the council is incompetent and that the rates are invalid.
It is asking the Government to dissolve the Kaipara Council and replace it with a commissioner.
Auditor-General Lyn Provost is to conduct an inquiry into the council's development of the Mangawhai Community Wastewater Scheme, at the request of the council itself.
In a statement, the office of the Auditor-General says the terms of reference for the inquiry are yet to be finalised.