The Nelson City Council has agreed to defer rates for businesses affected by city centre infrastructure works.

The $78 million Bridge to Better project, jointly funded by the council and government, involves the replacement of three waters infrastructure through the city centre. Work began in 2025 and will be complete by 2027.

At a council meeting on Thursday, elected members agreed to allow affected businesses to defer rates from the current year, with repayments split over the next three years.

It comes after several struggling businesses asked the council for financial help.

Longstanding cafe and food store Prego Mediterranean Foods & Comida Cafe shut its doors in June, and the owners said the roadworks were one of the factors in its closure.

Co-owner Claudia Kern previously told RNZ that roadwork adjacent to Bridge Street meant there was a six-foot fence across the cafe entrance for several months in the lead up to last Christmas and she estimates they lost around $50,000 in revenue during November and December.

Mayor Nick Smith said the proposal to defer rates came after he and the deputy mayor met with a number of "very distressed" business owners who were feeling the pressure of the ongoing roadworks.

He said it was unusual for councils to offer a rates referral or discount during infrastructure works and said it was with "some trepidation" that the council were considering it.

Staff had gone to "tremendous effort" to try and minimise disruption in the city by promoting businesses, he said.

"It is unfortunate the combination of economic downturn, the additional financial pressure from the oil crisis, as well as this work which really does have this group of businesses under pressure and so I do think it is worth council considering it."

Smith acknowledged the work was "incredibly disruptive" but said it was essential to renew and upgrade infrastructure that in some places, was over 100 years old.

The council said it would only consider rates remission if landlords agreed to provide the equivalent financial relief to the tenant.

Deputy mayor Pete Rainey said it relied on landlords "coming to the party".

Property owners must apply on behalf of an affected tenant, and sign a declaration that the tenant would receive the equivalent financial relief.

Councillor Lisa Austin said she had spoken to a couple of Bridge St landlords about a potential rates deferral and had positive feedback.

"The tenants are going to have to prove they have had a loss and [the landlords] said that will not be hard to do, most of their tenants are really suffering right now."

Applicants from eligible businesses along Bridge Street between Collingwood and Rutherford Streets must show a reduction in turnover for the quarter ending 30 June 2026 against the same quarter in 2025 to qualify for the deferral.

If every eligible business qualifies, the total rates deferred for 2026/27 are estimated to be $1.3 million.