A ratepayer group led by some ousted Tauranga City councillors is calling for a fresh election, claiming legal advice shows it was "unlawful" for the Government to replace them with commissioners.
However, Local Government Minister Nanaia Mahuta is defending her appointment of the commission, as have two parties that advised her - with one saying the councillors should "move on".
After months of in-fighting between Tauranga's elected members, mayor Tenby Powell's resignation and a critical review of the council's governance, Mahuta confirmed in December she would replace the elected members with Government-appointed commissioners - the harshest intervention option available.
Councillor John Robson commissioned a legal opinion from top law firm Russell McVeagh on the decision.
The firm's advice raised several legal issues, including that the minister could not appoint a commission "unless alternative lesser interventions ... would be unlikely to prevent impairment of local government".
The opinion found a Crown Manager - an appointee who can direct the elected council -appeared to have been a viable option but commission alternatives may not have been fully considered.
"There appears to have been a failure to properly assess this question, contrary to the statutory requirements."
It noted the minister could exercise judgement and there was a "subjective element to the
test", and that councillors had an opportunity to respond in the decision-making process.
The law firm also raised questions about the standard of information provided by the Department of Internal Affairs to the minister supporting the intervention, saying there were inconsistencies and omissions.
"If the officials' advice to the minister is flawed or inadequate, this may impact on the lawfulness of the minister's decision."
"It is a concern that the willingness to substitute elected members with Government appointees in these circumstances will provide a precedent for intervention in the future."
The opinion also raised the "failure" of the review and observation team to give councillors 14 days' notice, per its terms of reference, of its final recommendation to bring in commissioners.
Mahuta told the Bay of Plenty Times she was confident the decision-making process and appointment of the commission to the council "followed a robust and considered process".
"The Local Government Act confers on me powers to intervene in a council if I consider that a significant problem exists. There are a range of intervention options available which must be carefully considered and weighed against the associated risks," Mahuta said.
"Having considered the extent of the council's problems carefully, along with a range of evidence and advice, including the council's response to my intention to appoint a commission, I consider the appointment of a commission was necessary to deliver the strategic leadership that the council and city needs."
Mahuta said the observer team's report "identified significant governance problems among the council's elected representatives".
In the weeks before the decision to appoint commissioners, the council was monitored by an observer team headed by Peter Winder, a former Local Government New Zealand chief executive and commissioner/Crown manager of Kaipara's council.
His team presented its findings in November, recommending the council ask for a Crown manager and observer to be appointed.
Councillors Steve Morris, Bill Grainger, Andrew Hollis, Dawn Kiddie, Kelvin Clout and Robson carried a vote to wait for three days before determining whether to action the recommendation.
Winder's team changed their recommendation and backed bringing in commissioners, a decision Mahuta later took.
Kiddie, in her role as spokeswoman for Tauranga Ratepayers' Alliance, said in a press release the Russell McVeagh advice, in her view, provided a "chilling insight into the casual way the Minister stripped our community of democracy".
Kiddie said the advice, publicly released by the alliance, would be "embarrassing for Wellington" and it showed how vulnerable the city's commissioners were to legal challenge.
"But the way to fix this is easy, Tauranga should be returned to democracy with fresh elections held."
The press release from the alliance stated the appointment of commissioners was likely to be "unlawful".
Kiddie, Morris, Hollis and Clout are among members of the alliance's steering group.
Asked why he sought the legal opinion, Robson pointed to an email he sent Stuart Crosby, president of Local Government New Zealand.
In the email, Robson said the council should have followed Crosby's advice to seek more time and professional advice after Mahuta indicated she intended to appoint commissioners.
Robson was the only councillor who did not sign the, in his view, "rushed and amateur response" councillors sent to Mahuta asking her not to take that step.
He sought legal advice about Mahuta's decision and said he agreed with the findings, saying there were "serious questions about whether the legal grounds were met".
"As is clear from the RMV advice, the choice of intervention in Tauranga sets a worrying precedent for the [local government] sector," he wrote in the email.
He was concerned the minister's decision did not account for Tauranga's real issues, "of which the poor behaviour of some elected members was merely a symptom".
"For an ill-informed minister to use that poor behaviour as an excuse to unilaterally impose inequitable infrastructure funding costs on the residents of Tauranga does not bode well for the current discussions on the future of local government."
A Department of Internal Affairs spokesperson told the Bay of Plenty Times the organisation provided strong analysis and accurate information to the minister but did not recommend any option.
"We believe that our advice clearly outlined the gravity of any decision to intervene in the council and the impact that any form of intervention would have on local democracy."
Winder said the observer team did nothing wrong by not giving 14 days' notice to councillors. He said they used a second option in the terms of reference to report to the department, which allowed for shorter notice by informing the council's chief executive of their intentions, "which was done verbally".
"My strong advice to everybody would be to move on because it's really important at the end of the term of commissioners, Tauranga is able to return to effective democracy," Winder said.
Commission chairwoman Anne Tolley said, in response to Robson's comments, that the minister had not played any role in determining the city's Long-term Plan or the funding cost of infrastructure.
"These matters were initiated by the former council and supported by all but one elected member in December last year."
The draft plan was developed based on that council decision and adopted after community consultation.
"No infrastructure of significance was added to the draft and the only real difference to the plan supported by council elected members was additional investment in community facilities and debt retirement," she said.
Tolley said such community consultation was "democracy at work".
"Through the recent draft Long-term Plan process, we received close to 1800 submissions and heard some 50 hours of submissions," Tolley said.
The Long-term Plan is expected to be adopted later this month and Tolley said it would deliver the progress the wider community wanted.