Hamilton City Council is holding the door open for a shared water company with Waipa District Council after a potential judicial review of the decision was received by Waipa.

After receiving the warning of a judicial review, Hamilton City Council understand that Waipa is seeking legal advice in light of the notice.

The Hamilton council resolved on December 12 last year to establish a Shared Waters Management Company with Waipa District Council, but on December 19, the Waipa council declined to proceed with a shared water company by a narrow majority.

The shared water company would manage water, wastewater and stormwater services for the region.

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Executive director special projects for Hamilton City Council Blair Bowcott said communications remain open with Waipa about the possible shared water company.

"The decision sits with them if they choose to make a change or not," Mr Bowcott said. "We have said to Waipa that we are very positive about this model but the decision rest with them and currently they have declined the opportunity."

Hamilton City Council has spent just under half a million dollars so far into the work of attempting to set up the operation.

"Their governance group was fully on board with the proposal. It was a jointly worked up report and a joint proposal.

"Suffice to say it certainly came as a surprise to the government group, to myself and to the executive staff at Waipa." "It is disappointing to get to that last step and have it declined."

Councillor Mark Bunting asked what has been central governments response to Waipa's decision.

"They were certainly disappointed to see that all this work has come to no progression in terms of process."

"There has been no formal response from government, there has certainly been lots of murmuring and I've heard like you Mark that the government may force change upon us."

Councillor Paula Southgate asked Councillor Dave Macpherson and Mayor Andrew King to flag this issue with government when they meet on Monday this week.

"We are still being looked at in terms of how efficient and effective does local government run together," Ms Southgate said.

"We've been left to our own devices to demonstrate that efficient and effectiveness that we can deliver without a force hand of government and we have failed as a collective we. It is vital that we operate in the most cost effective and efficient way on behalf of our ratepayers."