Auckland Council is contacting hundreds of churches that received rates bills for the first time, telling them not to pay until councillors have had a chance to discuss the matter.
A review of non-rateable properties by council staff identified 402 churches requiring changes to their rating. This resulted in rates bills, some of them large, going out earlier this month.
The review found a lot of church property was not being used for religious purposes, which is not subject to rates, but instead was being used for business purposes, which is.
After complaints to councillors, it was discovered the finance and performance committee had been briefed on progress of the review, but no political decisions had been taken to approve a new rating policy for churches.
Pastor Rob Markley, of the Birkenhead Baptist Church, was surprised to receive a rates bill for $1080 after the church had previously only received a waste management charge of about $150.
He said it appeared the council was dividing up the property between places used for worship and commercial purposes, but there was nothing on the rates demand to say how the council had determined it.
He said the church, in a low socio-economic area, hired its facilities for dance lessons, indoor bowls, a dance school and Weight Watchers for a small fee.
It had also been renting out a church car park to contractors building a new retirement village up the road for more than two years and used the money to paint the rusty roof on the church at a cost of $16,500.
"We are not running a business. We are surviving on donations and providing a resource that really helps the community. It's basically illegal because churches are exempt from taxation," Markley said.
Finance committee deputy chairwoman Desley Simpson said she had called for a full report on churches and their rateable status following concerns from some.
"There are churches out there, for the very first time, have been sent a rates bill and there has been no political direction," Simpson said.
She said the issue of rating churches had been different across the city from the days before the Super City and councillors needed to have a conversation about where the council went on the issue.
The council began contacting churches this week to advise them not to pay the rates until councillors had had the opportunity to consider the issue.
Papakura-Manurewa councillor Daniel Newman said it was a "bloody debacle" charging rates to churches without a political mandate, saying he would be making it clear during the review that the council should not be rating churches.
Bishop Ross Bay, of the Anglican Diocese of Auckland, said the church was disappointed by Auckland Council.
"Our Ministry Units and their facilities are valuable resources to our communities and this decision would have a detrimental effect by inhibiting the services our Ministry Units could provide.
"Auckland Council has responded well to us about this matter and we feel that we will be able to resolve it in a positive way."