Silver Springs Ltd spokesman Dennis Brown said the company was the first in the area installing "aqua cell" drainage units at its 170-section Wingatui Rd subdivision.
Rainwater run-off would be filtered through the aqua cells before seeping back into the ground water.
The alternative, flushing stormwater into the nearby Silver Stream via conventional piping, did not meet the company's objective to contain run-off water on site.
"I'm not necessarily a greeny . . . but the idea was to use [drainage systems] which were in harmony with the Silver Springs concept we have hung our hat on," Mr Brown said.
In addition to "attenuation" systems which slow the filtration of water into the aquifer, rainwater could also be stored in underground tanks so residents could use "grey water" for irrigating property or washing vehicles.
Gravel in the area added to effectiveness of the filtration system.
But installing the system has not been straight-forward.
During 2006 environment court hearings, the Otago Regional Council expressed concern the hard surfaces would increased run-off.
"But we were finding, what we wanted was what the [regional] council was purporting," Mr Brown said.
"We ran up against the Dunedin City Council, which has been opposed from the outset. I would say they haven't wanted to embrace anything . . . different from the status quo. It seems they think it's simpler to fire it into a pipe and flush it downstream."
The company spent "several hundred thousand" dollars having Auckland-based hydrology consultants develop drainage plans.
Tests indicated the aqua cell systems lessened the risk of pollutant release and downstream flooding during heavy rain, Mr Brown said.
Installation costs were comparable with linking drainage to conventional piping.
Christchurch-based company StebeXcavations was installing the Swiss-made aqua cell units at the Mosgiel site.
The Dunedin City Council opposed rezoning the land for subdivision at the 2006 hearing.
Its water and waste services manager John Mackie said the council initially had reservations about the aqua cell system, due to the potential for high maintenance costs, and removing silt from the system.
"But we were satisfied after the water and soil testing in July, after major rain events."
The council would continue to review alternative storm-water systems on a "case by case basis" taking into account soil conditions at each building site.
