Councillor Glenys Searancke has been stood down as lead of Rotorua Lakes Council's creative portfolio.
Rotorua Daily Post understands she has also been stood down from her role as council representative on the Bay of Plenty Regional Council's public transport sub-committee.
Mayor Steve Chadwick and councillors Mrs Searancke, Merepeka Raukawa-Tait and Rob Kent met earlier today.
At that meeting Mrs Chadwick asked Mrs Searancke to consider her position around creative portfolio lead given a conflict of interest as chairwoman of the Rotorua District Residents and Ratepayers Society, the council said in a statement.
Mrs Searancke said she saw no conflict of interest and would not stand down.
Mrs Chadwick said she therefore had no choice but to change the creative portfolio lead.
"I am supported by other portfolio leads, the deputy mayor and senior councillors," she said.
"I appreciate Glenys' years of community service and commitment to Rotorua and acknowledge what she has done for the district. This decision has nothing to do with that. In my view, and in the view of a number of people, there is a conflict of interest.
"Given Glenys wants to retain her role with the Rotorua District Residents and Ratepayers Society, then there is a conflict and I had no choice."
Mrs Searancke said she was bitterly disappointed by the decision.