Hawke's Bay Regional Council is divided over plans to overhaul the board of its investment company ahead of a proposed $80 million injection of ratepayers' money into the Ruataniwha dam project.
The council will vote this week to remove elected representatives from the board, to avoid a perceived conflict of interest.
But plans to replace the three councillor appointees on the board with two professional directors is opposed by some councillors.
The Hawke's Bay Regional Investment Company Ltd (HBRIC) was set up to manage the council's larger infrastructure investments.
HBRIC has been driving the council's bid to obtain resource consent for the Ruataniwha water storage scheme, a $265 million dam and irrigation project for drought-prone Central Hawke's Bay.
It has also been working with potential co-investors in the scheme to top up the $80 million the council is considering investing in the project.
HBRIC has been governed by a seven-member transitional board which includes three elected councillors: Fenton Wilson, Christine Scott and Alan Dick.
The council has received legal advice that it is not a conflict of interest having elected members on the board but it has agreed they should step down to avoid any perception of one. There is disagreement, however, as to whether they should be replaced.
A meeting of the council's corporate and strategic committee last week voted to replace the three councillors with directors Danelle Dinsdale and David Faulkner.
Two councillors, Tom Belford and Rex Graham, voted against the move, which will be debated again when the full council meets on Wednesday.
Mr Belford said yesterday there was no benefit in adding more members to the board beyond the four who would remain after the councillors stepped down. The four are: Andy Pearce, Jim Scotland, Sam Robinson and Andrew Newman.
Mr Newman, who is chief executive of the regional council, has been seconded as managing director of HBRIC to oversee the Ruataniwha project. Liz Lambert has taken over his council duties as interim chief executive.
Pauline Elliott, a spokesperson for lobby group Transparent Hawke's Bay, said a vote by the corporate and strategic committee last week to amend the HBRIC constitution to accommodate changes to the board makeup would not help with the public's perception of how the council was dealing with the issue.
Meanwhile a report from HBRIC prepared for this week's council meeting says the investment company spent $530,000 last month on the board of inquiry hearing considering the Ruataniwha project.
The five-member board of inquiry has been convened to consider whether resource consents for the project and related changes to the Hawke's Bay Regional Resource Management Plan should be approved.
Last month's costs included $149,000 for consultants, $131,000 for witnesses giving evidence at the hearings and $239,000 to cover expenses of the Environmental Protection Authority which is running the inquiry.