The government has confirmed that a commission will be appointed to Tauranga City Council.
The council was given 10 days to respond after Minister of Local Government Nanaia Mahuta informed it early this month that action was being taken because of significant governance problems among the councillors.
In a statement, Mahuta said the council's response did not provide sufficient evidence about how it was addressing the issues.
"I consider a commission to be necessary to deliver the strategic leadership that the council and city needs," Mahuta said.
"I will be sending the commission a strong direction to ensure that the Tauranga community is engaged with and consulted on all significant decisions of the council, as is required in the legislation."
Last month, Tauranga's mayor Tenby Powell resigned and advised the government to appoint commissioners.
Mahuta said she hoped the councillors would work with the commission, whilst also acknowledging it had been a stressful period for them and the community.
"This will put the council in the best position to return to fully elected representation at the 2022 local authority elections.
"The confirmation to appoint Commissioners for Tauranga will help to pave the way for the next set of decisions early next year."
She said the appointment of a commission would remove the requirement to hold a by-election.
The commission's term will begin in early 2021 and end at the triennial local authority elections in October 2022. Appointments to the commission will be announced in February.
In a statement, Tauranga Chamber of Commerce chief executive Matt Cowley said it must not have been an easy decision, but there was no other option.
"Due to the current environment, Mayoral candidates with suitable skills and experience would not be attracted to stand in this bi-election. The situation elected members means a reset is needed."
Cowley said there was hope that money would be better invested with the oversight of commissioners.
"The business community just wants progress. The show must go on."