Waitara leaseholders will be employing independent valuers to assess the council land they live on.
Skyrocketing fees are crippling them, leaseholder Eric Williams says, and he hopes the valuer's assessment will lead to lower rentals.
If the leaseholders' valuer cannot reach an agreement with the New Plymouth District Council valuer then the two parties will enter arbitration.
Williams said it would be costly but the residents had been backed into a corner.
"The council keeps on ripping into us for no reason and we just can't afford it," he said.
"They just treat Waitara as a cash cow and it's got to stop."
Williams has lived on Newbury St for about 40 years and said in that time his lease had risen to $4000 a year on top of his rates, which were now $1800.
"Leases and rates used to be pretty much neck and neck," he said.
The council was charging the leases on the basis that a plot of land was worth about $90,000, but had been prepared to sell it at "fair market value" to the Crown for about $30,000 a plot, he said.
The leases should be rated "from the value the council agreed to with the crown".
However, council chief executive Barbara McKerrow said the two figures came from different types of values, and the fair market value for the Crown was lower because it was for a portfolio of leases.
The council was not fearful of arbitration, she said. "Arbitration is not necessarily a bad thing because then you get clarity."
The Waitara Endowment portfolio comprises 769 leases, including 701 residential leases.
More than half the lessees are paying less than $500 a year. About two thirds pay less than $1000, 9 per cent are paying between $3000 and $3999 and five per cent pay $4000 or more.
In 2005 the Office of the Ombudsman sent a letter to the group, confirming the council had the power to lower leases.
Ombudsmen Beverley Wakem said the leaseholders had the right to approach the council to seek a reduction of the rents.
"While it may seem that the council has an obligation to set rentals at market levels, my readings of the provisions of the Public Bodies Leases Act 1969 suggests that it is nonetheless open to the council to provide leaseholders with some relief where the council feels it is appropriate to do so," Wakem said in the letter.
However, the council believes the act cannot be read in isolation and does not provide wholesale power to globally reduce rents.
Williams said the council had been unwilling to compromise and only offered to defer payments.
"They told us to go and see Winz because Winz would give us something for hardship, but why should the taxpayer have to pay for the greedy council?"
■ There will be a meeting for the Waitara leaseholders at 1pm on July 6 at Waitara War Memorial Hall to discuss the imminent arbitration.
- Taranaki Daily News
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