But the decision received backlash from the industry, with NZ Kiwifruit Growers Incorporated (NZKGI) bringing a judicial review proceeding to the High Court, supporting an objection grower Tim Tietjen had before the Land Valuation Tribunal.
In 2021, Tietjen took his objection to the tribunal after the capital valuation on his small orchard increased from $1.65 million to $4.1 million.
On Tuesday, a decision was released by the tribunal revealing a kiwifruit licence should not be seen as an improvement to the land - a decision that would apply to all growers in the Gisborne district.
"Overall, we have concluded that the value of the licence is not part of the improvements to the land or for the benefit of the land," the decision read.
While the tribunal agreed that over time the value of the licence may reflect its profitability, it was an unknown at the time the owner bought the licence and grafted the cultivar (variety of kiwifruit).
"Essentially, we have concluded the decision to utilise the cultivar is part of the decision for the business operation of the orchard and it is a cost of that operation rather than the ownership of the land itself."
The tribunal concluded the capital value of Tietjen's property for the district revaluation should be $2.8m, as opposed to $4.1m.
The decision leaves questions about how the council will make up the rates shortfall on what it expected to accumulate from the over 60 orchards in Gisborne operating with a gold kiwifruit licence.
Gisborne District Council was approached for comment on that point but did not provide a response.
Neither would it say how much it was estimated to lose each year from lost rates related to the decision.
"The council notes the release of this decision and will not be providing further comment until the appeal period has passed," council chief executive Nedine Thatcher Swann said.
"The council is, however, considering the decision and taking advice on its options.
Meanwhile, Tietjen was relieved at the outcome, saying he felt "vindicated".
"It's a big step to go to the tribunal so we were worried about it, but we're stoked we got that result.
"It's really disappointing to have to go through all the submissions and lodge the objection, and go through the tribunal process to get back to square one really."
NZKGI chief executive Colin Bond said they saw this as an example of the council trying to leverage off what might be considered a "cash crop" in the region.
"That a council singled out gold orchardists for the purpose of levying significantly higher rates against their private intellectual property contracts smacked of unfairness and appeared to be local government targeting successful businesses based on their performance rather than the value of their land."
