Similar rate rises could follow in the next two years as the City attempts to manage the impact of the global financial crisis and make up for its investment losses.

Added to the financial pressure it is under are loans to deliver major projects including the Albany Leisure and Aquatic Centre upgrade, the Anzac Peace Park and the North Road Civic Centre.

Albany Mayor Milton Evans said Council was “extremely reluctant” to increase the rate but was driven by absolute need.

“Compared to previous years this sounds like a lot,” he said. “If the proposed rate rise is adopted after the budget deliberations, the average household rate bill is likely to rise by about $104 a year, or about $2 a week – less than the price of a sandwich.”

The rate increase was recommended in the draft budget discussed during a special meeting of Council on Tuesday.

“Investments made through Lehman-related entities are the obvious connection, but the City’s budget is also directly affected by delays in land development revenue,” Mr Evans said.