The council's hand has been forced, however, by a threat of legal action from property owners in the Heritage Area, who can do little with their land under current rules.
A letter from the group's lawyer informed the council that legal action would start the day after its June meeting, unless the District Plan change process was started.
Acting environmental management boss Murray McDonald said at last week's meeting the council would be on "shaky ground" if legal action went ahead. If the issue ended up in the High Court the cost to ratepayers was likely to be substantial.
"The two parties are probably not going to agree, but we have to test it in the plan change process."
While the council had so far focussed on the two opposing groups, many other people in Paihia were likely to want to have a say because the final decision could shape the the future appearance of a stretch of Paihia's waterfront, he said.
Deputy Mayor Ann Court said she did not realise at the May meeting that councillors had been committed to acting on the plan change by a previous council.
There was a lesson to be taken from the U-turn, she said.
"As a council we should not commit ratepayers to helping small groups of people fight their battles with ratepayer money," she said.
All but Councillor Steve McNally voted to start the District Plan change process.