The upgrade of an at-risk water supply which divided a coastal northern Hawke's Bay's settlement will be going ahead.

Mahanga is a beachside town near Mahia which has about 60 properties, about half of which are occupied by permanent residents.

After a decade of discussions, a binding referendum was held late last month, with nearly 80 per cent voting to keep their untreated water supply open.

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Although the water supply there is supplementary, since 2007 the council has discussed its upgrade because of the potential health risks it poses.

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Such risks were highlighted after the Havelock North water contamination crisis in August last year.

But before the referendum long-term residents worried some would have to leave their homes in the face of an unaffordable upgrade of their at-risk water supply.

With a large number of "absentee owners", there was concern that despite the wishes of permanent residents the votes cast by non-permanent residents would mean the supply would be upgraded - something they could afford but others might not.

The high number of holiday-home owners also drove up the area's deprivation rating, making it ineligible for any government subsides for an upgrade.

Although there was vocal opposition to keeping the supply open, when 92.7 per cent of eligible voters headed to the polls on September 29 only 11 people - or 21.6 per cent - voted for its closure.

In all 78.4 per cent of voters, or 40 people, voted against the closure. Legislation requires that when a water service is to be closed, a threshold of 75 per cent of votes cast is needed.

Wairoa mayor Craig Little said engineers were now working on a treated water system for the town.

He thought the community was feeling "pretty good" about the result.

"I thought the community was pretty well a 50/50 split, but obviously this shows it's definitely not. There's obviously a lot of people who want [the upgrade] out there who actually live out there full time, that was quite interesting.

"This is what we needed to guide us or tell us what to do . . . it'll be business as usual working on toward that now."

Mr Little had estimated the upgrade could cost between $500 to $800 per household, but yesterday said it could be more.

Wairoa's Long Term Plan 2015-2025 notes a sum of $200,000 was allocated for a treatment upgrade to the Mahanga supply before 2020.

The supply - which originates from a shallow bore - regularly returns contaminated samples, and does not meet the New Zealand Drinking Water Standards (NZDWS). It also lacks enough pressure to be suitable for firefighting - even though there are hydrants in the reticulation.