Hawke's Bay Regional Council has voted to invest $80 million of ratepayers money in the Ruataniwha Dam subject to several conditions being met.
The motion was passed by six votes to three on Wednesday, with councillors who voted against saying they did not have enough information to make an informed decision.
Councillor Peter Beaven successfully moved an amendment that a final decision on investing in the dam must be subject to councillors being satisfied with the business case.
Mr Beaven said he supported the motion because the final decision now rested with councillors as a result of that amendment and they will get another vote.
"I have found myself since I've been elected in the middle of some lamentable processes and this motion today, before it was amended, was one of them," he said.
Council chief executive Liz Lambert said says it may be months before a recommendation on investing is known, due to legal challenges against the board of inquiry decision.
No major investors or farmers signed up
The project does not have any major institutional investors after Trustpower pulled out its $50 million investment, saying it was too risky and the returns were not high enough. Piggyback investor Ngai Tahu pulled out its $50 million after a suitable replacement for Trustpower could not be found.
The Hawke's Bay Regional Council's investment company HBRIC has admitted the draft board of inquiry decision on the dam does not give it a workable consent. The final board decision is due by Friday, but councillors will vote before the outcome of this is known.
The councillors do not know what the final cost of building the dam is, with HBRIC still negotiating the price with the preferred contractor DHL-Hawkins.
The project does not yet have any farmers signed up to buy the water, and it is unclear whether there is enough support among farmers to buy the minimum 40 million tonnes required for construction to begin.