A rates rebellion in a small coastal town is growing as more than 500 Mangawhai residents refuse to pay an estimated $1 million or more to the debt-ridden Kaipara District Council.

Rates have soared this year by about 40 per cent for many residents - more than doubling for some - to help pay off the council's $80 million debt, which was mainly caused by a $58 million cost blowout for a local sewage treatment system.

Peter Grierson, who owns a modest two-bedroom bach, said he couldn't afford to pay his 38 per cent increase to just over $3000.

"We can't sell as the property market is depressed while this situation continues - not that I want to sell the place in any case. So we have to keep the bach. But we can't afford the rates."


Former New Zealand cricketer Warren Stott, who runs the Riverside Holiday Park, was told earlier this year that his rates bill would increase by more than 1300 per cent from $6316 to $84,850. He's still not happy with a revised 43 per cent increase to $9050 and worries about the effect on the local economy.

"The increased rates are only just starting to bite now so we might see some increased pressure on businesses and households."

Another owner, who asked not to be named, said his rates were up from $2400 to $5100 and he was trying to sell. "I've had to take on an extra job, solely to cover rates."

Mangawhai Ratepayers and Residents Association chairman Bruce Rogan said residents were refusing to pay because the sewage system was an ever-expanding "Ponzi scheme" foisted on the community without its consent.

Meeting papers show councillors secretly agreed to expand and more than double the cost of the project in 2006 without telling the community for another four years and the council's own legal opinion shows it has collected about $17 million of rates illegally.

Mr Rogan said residents were being asked to bail out the scheme again when many had already paid a lump sum which was supposed to cover the capital costs.

The council resigned in August and was replaced by commissioners. Chairman John Robertson, a former National MP and Papakura mayor, said 90 per cent of residents were paying their rates, including 75 per cent in Mangawhai.

He said it was important to ensure "we don't have ratepayers who are paying rates ending up having to pay for the services of those that do not - to me that's just not fair".


Asked if ratepayers should be expected to pay for a project which doubled in cost without their knowledge or agreement, he said issues like this would be considered by an Auditor-General's inquiry.