Mrs Chadwick said she therefore had no choice but to change the portfolio lead.
"I am supported by other portfolio leads, the deputy mayor and senior councillors," the mayor said in a statement.
"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."
Mrs Searancke said she did not believe she had done anything wrong.
"I've worked really hard on the regional council public transport committee, and on my portfolio, and we have come out with a great strategy. I would have liked to have seen that through," she said. "I feel the only thing I've done is disagree with the mayor."
At the end of the next term in October Mrs Searancke would have served 30 years as a district councillor. She has already stated she would not be running for re-election.
She said she had trouble sleeping on Wednesday night, following the day's heated council meeting.
"I did not sleep much and have that gutted feeling - what a way to finish my terms on council, I've worked hard.
"If I'd done anything wrong, or been apathetic, or not done my job - but I've done everything, and more.
"When I get over the disappointment I'll be back up and fighting."
Councillor Mike McVicker said that in his opinion Mrs Searancke had been unfairly treated.
"I'm extremely disappointed for Glenys, she has approached all her roles in a very dignified manner over the years, she's made a huge contribution to the council and the city and it's just disappointing. I'll be registering my concerns about what has happened," Mr McVicker said.
Councillor Merepeka Raukawa-Tait said she fully supported the mayor's decision.
"I feel that when you are on a council you try to see things from all points of view and we also represent the residents and ratepayers of this district.
"You have to be careful about who you align yourself with.
"Honestly, I did see this coming and I'm not sure why Glenys did not see this as a conflict."
It is not known at this stage who will take over Mrs Searancke's roles.