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After the local government reforms of 1989, the term "city" began to take on two meanings in New Zealand. Before 1989, a borough council with more than 20,000 people could be proclaimed a city. The boundaries of councils tended to follow the edge of the built-up area, so little distinction was made between the urban area and the local government area.

In 1989, the structure of the local governments in New Zealand was significantly reorganized. The new district councils and city councils were nearly always much larger geographically, and they covered both urban land and the surrounding rural land. Many locations that once had had a "city council" are now being governed by a "district council".

The word "city" began to be used in a less formal sense to describe the urban areas of New Zealand independent of local body boundaries. This informal usage is jealously guarded. The district government of the town of Gisborne, for example, adamantly described itself as the first "city" in the world to see the new millennium. However, Gisborne is governed by a "district council", but its status as a city is not generally disputed in New Zealand.