Tasman District Council is seeking $18 million from the Provincial Growth Fund to help make up a shortfall in the cost to build a controversial dam.

Council chief executive Janine Dowding told the Herald today the application had been lodged with the Ministry of Business, Innovation and Employment on Monday.

The council announced last month that the final construction cost for the proposed 53m-long dam in Lee Valley near Nelson had blown out from $49.8m in 2015 to $68.1m, leaving it $18m short.

Other costs associated with the project, a joint venture between Tasman District Council and Waimea Irrigators Ltd, could push the total $26m over the original figure of around $76m.

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Dowding said the council believed the application sat "very strongly" with the funding criteria of the Provincial Growth Fund.

The council had received no word on the application yet but it was "hopeful" it may be successful. "But we really don't know," she said.

Alternative options for funding the shortfall would be explored should the application be unsuccessful.

"Alternative options have been considered throughout the course of the project and those will be among the considerations the council deliberate over," Dowding said.

The council would meet on August 28 to consider options and decisions would be made then.

Government and irrigators are already down to give $49m in loans and grants towards the project, which the council says is necessary to secure future water supply to the region.

The Government announced in April that Crown Irrigation Investments Limited was being wound down but it would honour the agreement to provide up to $35m already agreed for the dam project.

Nelson City Council is putting $5m into the project.

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The dam, which would increase water flow in the Waimea River, has been dogged by controversy, not least of which involves the council seeking an easement on conservation land in Richmond State Forest Park for the creation of a reservoir.

A local bill, which is being sponsored by Nelson MP Nick Smith, would also seek the right to build the dam on a Crown riverbed.

When Finance Minister Grant Robertson announced the winding down of funding for large-scale irrigation projects in April, he said large-scale private irrigation schemes should be economically viable on their own without the need for significant public financing.

But he left the door open to funding through the Provincial Growth Fund, saying smaller-scale, locally run and environmentally sustainable water storage projects could be considered on a case-by-case basis.

Tasman Mayor Richard Kempthorne has previously said the ongoing success of the Tasman and Nelson regions was at stake and the Waimea dam represented a "complete solution to urban and rural water supply for the Richmond, Brightwater, Mapua and Waimea areas for generations to come".

"The consequences of cutbacks in water allocations across the Waimea Plains and more frequent and severe restrictions will have significant implications for the Tasman and Nelson economy and lifestyle," he said.