The proposed Ruataniwha dam and irrigation scheme is set to reach a key milestone today with a board of inquiry expected to release a draft decision clearing the way for the project's construction.

But the $275 million scheme faces major hurdles after today's resource consent decision. The proposal is to build an 83-metre-high concrete dam on the Makaroro River to store water for irrigating 25,000 hectares of Central Hawke's Bay land.

Hawke's Bay Regional Council is due to vote tomorrow to approve the spending of $80,000 on a public consultation process ahead of a vote by councillors in late June on whether to invest up to $80million of ratepayers' money into the project.

The council, through its investment arm, Hawke's Bay Regional Investment Company Ltd (HBRIC), has been promoting the scheme as a solution to drought problems in Central Hawke's Bay which have hampered the region's economic development and put pressure on water supplies in the Tukituki River catchment.


As well as providing water for farming and crop production, the scheme would enable "flushing flows" aimed at improving the health of the river.

But environmentalists are concerned more intensive land use in the catchment will affect water quality by raising nutrient levels in the river.

An independent board of inquiry was convened last year to assess the application to build the scheme, along with associated changes to the Hawke's Bay Regional Resource Management Plan relating to the Tukituki catchment.

The details of those catchment plan changes, known as Plan Change 6, were hotly debated during 29 days of hearings in front of the five-member board which is headed by retired High Court Judge Lester Chisholm.

While the consents related to building the dam were relatively non-controversial and are expected to be granted, the focus of today's draft decision from the board will be on the extent of nutrient limits it applies to the catchment.

The board will consider submissions on its draft decision before issuing a final determination which is due by May 28.

Meanwhile, HBRIC and the council are continuing a flurry of work ahead of June's final vote on whether to proceed with the project.

Tomorrow's meeting of the council's corporate and strategic committee will consider a request from HBRIC to bring forward the draw-down of more than $60 million of regional council funding to invest in the Ruataniwha scheme during the next two years.

The council has previously signalled the possible investment in its long-term plan but had not expected HBRIC to require a draw-down in the 2014-15 year. Paying out the money earlier will reduce the council's interest income by more than $3 million.

Under a proposal being considered at tomorrow's meeting, HBRIC would repay the amount of lost interest by the 2018-19 financial year.

Tomorrow's meeting will also hear from consulting firm Deloitte, which has been commissioned to write an independent peer review of HBRIC's business case for the scheme.