Shellharbour ratepayers could be slugged with annual rate hikes of up to 10 per cent within four years under a radical plan to renew the city's failing assets.
Council staff proposed the hefty rate rises as well as possible increases in fees and charges at a private briefing of councillors on Tuesday.
On the same day, councillors were also briefed on the controversial $55 million City Hub development, which would be funded partly by selling off community assets and partly by increased borrow-ing.
Shellharbour households now pay an average $976 in rates per year.
In recent months, council staff have repeatedly raised the need to consider a special rate variation to address the city's poor performance on asset renewals and maintenance.
"Council is effectively consuming its assets at a far greater rate than it is replacing them," director of corporate policy Lee Furness said.
Options now on the table include "small" rate increases from 6 per cent ($58 a year) in 2013-14 to 7.5 per cent ($88 per year) in 2016-17.
"Moderate" increases would mean rate rises from 8 per cent ($78 a year) in 2013-14 increasing to 10 per cent ($126 per year) in 2016-17.
Both options include assumed rate-pegging limits of 3 per cent.
The rate-pegging limit in 2012-13 was 3.6 per cent.
The larger rate hikes would bring Shellharbour's low infrastructure renewal ratio in line with the state average.
The council would have to apply to the Independent Pricing and Regulatory Tribunal for a special variation.
Mayor Marianne Saliba said yesterday that no decision had been made.
The council will hold community workshops this month to collect feedback from residents about their expectations for services and asset maintenance in the city, and to discuss funding.
"So we're being very premature by discussing ... a special rate variation, because all options are on the table as to what ... people want within the community and how they want us to pay for that," she said.
"These are conversations that we're going to be having with the community over the coming months."
Cr Saliba agreed Shellharbour did not spend "anywhere near enough" on asset maintenance.
She also said the City Hub had "nothing to do" with any rate variation, a point echoed by council staff.
However, Liberal councillor Kellie Marsh argued that increasing rates at the same time as the council borrowed money for the hub would be a "slap in the face" to ratepayers.
"I think a special rate variation, however small it might be, will put increasing pressures on already struggling households," she said.
Independent councillor Peter Moran said some residents would not be able to afford the hikes.
"I look on this as being the Shell Cove rate rise because basically council staff did not give councillors the option last year of looking at whether we can afford to build a $150 million marina," he said.
Ms Furness said Shellharbour's last special rate variation was in 2007.