The Independent Pricing and Regulatory Tribunal (IPART) has partially approved Lithgow City Council's application for a special rate variation.
The council applied for 11.7 per cent from July 1, 2019, but will instead get a nine per cent increase.
The decision was handed down on Monday, May 13 after a lengthy process.
The application received 242 submissions on the proposal, the second most of any special rate variation being considered in this financial year. Submissions ranged from the general 'I don't want my rates to rise', to specific complaints about council projects, most often referring to the redesign of Cook Street Plaza and last year's Main Street upgrades.
Lithgow City Council will now need to vote on whether to apply the rate variation. Projects which have been earmarked to use the 11.7 per cent rate rise will also have to be reviewed.
In a statement released on Monday, IPART stated it had a concern that the council "did not ensure the higher figure was broadly understood by the community, in the context of the substantial impact of the proposed increase on ratepayers".
IPART's decision means the council is now able to increase the average residential rate by $29 in 2019-20. Average business rates would rise by $165, average farmland rates by $55 and average mining rates would increase by $6099 in 2019-20.
Lithgow City Council mayor Ray Thompson said the variation would allow council to invest about $300,000 in infrastructure projects, offering a "slight increase" to carry out projects council wants to see completed.
"We've got to work with what we've got," he said.
IPART chair, Dr Paul Paterson, said of the 242 submissions regarding the proposed increase were received by IPART, almost all opposed to the increase on the grounds of affordability for ratepayers.
"Nevertheless, we are satisfied the council has demonstrated its need for additional revenue to improve its financial sustainability and to fund operating and capital costs, and that it is taking steps to improve productivity and contain costs," he said.
"Over 66 submissions received from the community mentioned the nine per cent total cumulative impact instead of the requested 11.7 per cent cumulative increase."
According to a release from IPART, the decision stemmed from an "unclear description of the proposed special variation in some of the consultation materials used by the council to engage with its community".
"Our decision reflects the percentage increase that was more consistently understood by the community," Dr Paterson said.
Projects earmarked to use the projected rate rise, including significant road works, have been outlined in the 2019-2020 operational plan, which is currently on public exhibition for comment until May 27.