Glamorgan Spring Bay Council will be issued with a Performance Improvement Direction due to concerns about the council not meeting statutory obligations.
The direction is a middle ground between an investigation by the Director of Local Government and a board of inquiry.
It can only be issued on the advice of the Director of Local Government.
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Concerns surrounding compliance issues were first raised by independent consultants, who were hired by the council, in March as part of a process to develop a Statement of Expectations for councillors.
At the time one of the consultants, Greg Preece, said the council was not compliant because it lacked an asset management plan, asset management strategy and long term financial management plan.
He said council had some documents from 2014 but they were not adequate because they did not include all council assets.
"[Updating documents] should be built into your normal processes but obviously they had lacked some of those processes," Mr Preece said.
Minister for Local Government Mark Shelton said the direction was based on advice suggesting council was not complying with their obligation to establish, review and publish financial and asset management plans.
"The council has 14 days to provide a submission prior to a final determination that would describe the time frame for the Council to demonstrate compliance and potential sanctions should compliance not be achieved," he said.
"I recognise the council has been working hard to improve its approach to governance and has developed and adopted a Statement of Expectations reflecting the obligations on councillors to undertake their roles in accordance with the Act.
"The Tasmanian government is committed to ensuring all Tasmanian councils are governed well and have effective operations delivering the services expected by their ratepayers and their local communities."
Dolphin Sands Rate Payers Association secretary treasurer Robyn Moore welcomed the intervention.
"Community groups all throughout the municipality have been pulling their hair out regarding this current council," she said. "We are really happy that the Minister is intervening and trying to improve their performance."
State Liberal Bass MHR Sarah Courtney said the government is hopeful of receiving feedback from the council before the two week deadline.
"[Minister Shelton] has been engaging with the mayor on this matter, he has spoken to the mayor so we are hoping to receive feedback from the council within that two week period," she said.
"[Notices are issued] from time to time and it happens at various councils around Tasmania. What we are doing is working with councillors to ensure that they are complying with their obligations."