The Government is proposing to suspend local government elections in Kaipara until 2015.
Local Government Minister David Carter on Wednesday released a report by the review team he appointed to investigate the Kaipara District Council, which is struggling with a debt of more than $80 million.
The report concludes that the serious governance and financial challenges facing the council are beyond the ability of the current councillors to resolve.
The Government has appointed four commissioners to replace the council from next week - reflecting the heavy workload ahead in rebuilding the relationship between the council and the Kaipara communities.
Mr Carter says it is likely the commissioners will be needed for three years and the Government is proposing to defer local government elections in 2013 for two years.
The commissioners are: former MP and Papakura mayor John Robertson; Northland farmer and businessman Richard Booth; veteran local government executive Colin Dale; and former chief executive of Local Government New Zealand Peter Winder.
Auditors found that at least $17 million worth of rates have been unlawfully levied. The long-term plan adopted by the council at its final meeting in Dargaville on Wednesday gives commissioners a base to levy new rates for the coming year.
A full public gallery of angry ratepayers heckled and booed, warning councillors of court action if the long-term plan goes ahead.
Mangawhai Ratepayers' chair Bruce Rogan says David Carter has had the report on the council for more than a week and the community should have been told what is in it before the final meeting.
A spokesperson for Mr Carter says the minister will release the report as soon as possible.
Council executives blamed
Greg Gent headed the review team and says big capital projects stretched the council's capabilities.
Mr Gent told Radio New Zealand's Checkpoint programme on Wednesday that councillors were not adequately briefed by its executives and the standard of financial reporting was well below best-practice.
He says the council's previous chief executive, Jack McKercher, failed to provide enough information to councillors to make sound decisions.
"One of the key tenets of good governance is to ensure that your executive give you the information that they need to discharge your duty of care. The review team were of the view that that would have been close to impossible in these circumstances."
Mr Gent says an Auditor-General's report will supply more detail on where culpability lies for the scale of the council's debts.