Instead of drawing water directly from Lake Wanaka and attempting to filter out the problematic algae, the council is planning to drill up to four bores next to the lake.
The water from the bores would be naturally filtered through gravel and is expected to be free of algae.
The plan was presented to this week's meeting of the Wanaka Community Board by council project manager Rob Darby.
Mr Darby's recommendation to use the "notice of requirement'' process to designate land near the Wanaka Yacht Club for the bore field was adopted by the board.
Mr Darby pointed out the alternative was to seek resource consent.
The notice of requirement, Mr Darby said in his report, was a "planning tool'' used by the Government, local authorities and network utility operators.
Because the council considered the bore field would have no more than minor effects on the environment, the plan would not have to be publicly notified.
The yacht club had given its consent, Mr Darby said.
Much of the new infrastructure, covering a total area of 4197sq m, would be under the club's car park.
However, a 67sq m water-treatment building would need to be constructed next to the terrace below Lakeside Rd. It would contain chlorination and UV treatment equipment but no fluoridation equipment.
The cost was expected to be in the region of $1,369,000 to $1,582,000 plus 10% for "preliminary and general'' expenses, 10% for contingencies and GST.
Board member Lyal Cocks said the bore field would save the council money by eliminating the need to create the Hawthenden reservoir, which has been talked about for at least eight years.
The council has Otago Regional Council approval to create the bore field but has not yet applied to take water from it.
