Mayor Alex Walker said the district's rates have been kept "artificially low" for decades, at the expense of assets.
The increased rates would pay for three waters infrastructure and services and upgrade parks, reserves and other core infrastructure.
Walker said the steep increase aims to challenge and remedy the "dire state of aged and failing infrastructure".
"Quite frankly, it's frightening," she said. "We require huge investment in our infrastructure and assets across the district, which now cannot be paid for with rates alone.
"We have pipes over 100 years old, infrastructure that is literally crumbling away and buildings that we thought were earthquake tolerant, which are not."
The Long-Term Plan, which sets out council's activities, costs and required revenue and rates for the next 10 years, is reviewed every three years.
Mayor Alex Walker said the steep rates increase aims to remedy the "failing infrastructure" in Central Hawke's Bay. Photo / Paul Taylor
Walker said with a small population and ratepayer base across a large geographical region, the situation is complex.
She said the region needs more water and wastewater treatment plants than smaller districts with a larger population – Napier has just one wastewater treatment plant for a ratepayer base of more than 25,000.
"If you add decades of underinvestment in these infrastructural assets to that layer of complexity, you're facing some very sobering realities," Walker added.
Finance and infrastructure committee chairman Brent Muggeridge said councils like CHBDC were too small to afford all the upgrades to water and wastewater pipes they needed.
Councillor Tim Aitken said water restrictions are in place often because the pumps and treatment stations can't keep up with the rate of water being used.
"Water is gold," he said. "Everyone in CHB knows that."
