More than 20,000 apartment and unit owners in Sutherland Shire will have to pay an extra $300 a year in council rates from July 1.
The Independent Pricing and Regulatory Tribunal (IPART) approved the council's application to increase the minimum rate by 8.76 per cent, from $602.30 to $900.
Apartment and home unit owners, as well as about 1500 business properties owners - a total of about 25 per cent of all ratepayers - pay the minimum rate.
The 8.76 per cent rise will apply in rates notices for 2019-20 and the additional revenue can be permanently retained in the rate base for calculations in future years.
Rates for all other properties will rise by the 2.7 per cent limit set by the state government.
The council estimates the increase in the minimum rate will generate an additional $7.255 million per year.
IPART chair Dr Paul Paterson said the council was able to demonstrate that the change would allow the council to fund asset renewals and reduce the infrastructure backlog.
"It is also trying to share the burden of future costs more equitably," he said.
"Four submissions were received opposing the increase based on affordability and fairness
"While the percentage and dollar increase in minimum rates is significant, it reduces the gap between rates paid by minimum ratepayers and other ratepayers to reflect equity in the services consumed.
"The current minimum rate ($602.30) is 59.2 per cent lower than the average residential rate of ratepayers who are paying above the minimum ($1476) and 87.2 per cent lower than the average business ratepayer above the minimum ($4713).
When the council decided in November, 2018, to seek the rate variation, a statement said the increase was needed "to address the rising costs of power, the need to maintain and renew community assets and provide services into the future".
"Units or apartments pay substantially less than detached house owners across Sutherland Shire," the statement said.
"A recent independent community survey found that a large majority of residents believed the amount of rates paid to council should be fair between units or apartments and houses."
IPART Chair Dr Paul Paterson said special variations gave councils flexibility to generate additional income above the rate peg to meet specific needs.
"Council applications are independently assessed by IPART against the NSW Government's published criteria," he said.
"Submissions received directly from stakeholders are also considered.
"In making these assessments [variations were also approved for other councils], we have considered whether there is a genuine financial need for additional revenue to allow a council to be financially sustainable, and fund infrastructure projects or asset renewal requirements of their regions.
"We also look at efforts made by the various councils to reduce their costs and identify other sources of revenue, as well as the capacity and willingness of ratepayers to pay the requested increase.