The Independent Pricing and Regulatory Tribunal has rejected Port Stephens Council's request to raise rates by 65.9 per cent over seven years, citing community opposition for its decision.
But IPART approved a 76 per cent rate rise over five years in Dungog, less than the 97.8 per cent increase over seven years the council had asked for, and a one-off 15.13 per cent hike in Muswellbrook rates.
Port Stephens Council's application to increase rates by 7.5 per cent a year, well above the 2.7 per cent rate peg for 2019-20, attracted 680 mostly negative submissions and even united two long-time combatants, former mayor Bruce MacKenzie and ex-councillor Geoff Dingle, in opposition.
It would have increased average rates by $690 over seven years.
IPART chair Dr Paul Paterson said the council had not demonstrated that the impact of the "special variation" on ratepayers would be "reasonable".
"Our decision reflects our finding that the council's application does not meet the criteria in the Office of Local Government's guidelines, and that there is a mismatch between the priorities of the council and many of its ratepayers," Dr Paterson said.
"It was not clear that the additional revenue is needed to meet infrastructure backlog or renewal requirements, and a significant majority of ratepayers were not willing to pay for the works the council proposed be funded by the special variation."
IPART explained the decision on its website in more detail, finding the council had "only partly demonstrated a financial need for the proposed SV, as the SV expenditure is not needed to ensure financial sustainability or to meet infrastructure backlog and renewal benchmarks".
"The application also outlined a lack of community willingness to pay for the works the council proposed be funded by the SV. The magnitude of the increase in total dollars for the average ratepayer under the proposed SV would be considerable."
The council said in a statement that the rate rise would have funded community projects across Port Stephens, including rejuvenated town centres, many road and drainage upgrades, better sports facilities, more events, improved community amenities and new pathways.
Mayor Ryan Palmer said the decision would be "disappointing for many in the community who wanted to see a better and brighter future for Port Stephens".
"We will continue to apply for grants and advocating for state government support to deliver projects we know are critical to Port Stephens residents and visitors," he said.
"Many of the things that our community have been crying out for will have to wait to be completed.
"Our Capital Works plan will remain unchanged, which means we'll still be delivering quality services and facilities our community expect. Unfortunately, some works will need to wait.
"For example, Mustons Road at Karuah, significant drainage improvements at Shoal Bay and the missing pathway link on Gan Gan Road won't begin next year as we had hoped, but will be scheduled for around 2025 when we expect to have funds available."
Dungog Council can increase its average residential rate by $135 a year from July 1 and repeat the rise in each of the subsequent four years.
Muswellbrook ratepayers face an average $21 increase in 2019-20 if the council implements its approved rise.
"It is clear that Dungog Council has a clear and urgent need for increased funds," Dr Paterson said.
"However, given the magnitude of the proposed increase and uncertainties around budgeting, IPART considered it was prudent to approve the special variation for a period of five years, not seven as requested."
Muswellbrook Council met the special variation criteria set out in the OLG guidelines.
The three Hunter councils were among 13 in NSW to apply for special rate variations for 2019-20. Eight were approved in full and three partially approved.
Only Port Stephens and Tamworth had their applications refused.