The dam site was vested in the Kaitaia Borough Council in 1968. Later, in 1983, the council was granted a legal easement across trust land so it could access the dam from Okahu Rd.
However, around the year 2000, due to erosion on the easement, the council created another, illegal accessway across trust land, he said.
Mahoney said the trust had never stopped the council using the original easement and had allowed it to keep using the unapproved accessway throughout a court dispute and while the legal access was repaired.
"We've never stopped them going across our land, and we're not going to stop Kaitaia using the water," Mahoney said.
The problem with the Kauri Dam was that the water was affected by an algal bloom every year from about December to April or May, making it unsuitable — toxic even — for drinking.
In a court case last year the council was ordered to pay the trust $80,000 in compensation for use of its land since 1933.
Mayor John Carter had agreed in 2015 to pay that amount to the trust but he was later found to have acted outside his authority when striking the agreement.
A council spokesman said water from Kauri Dam could not be treated to the safe levels required because its quality was so poor during the summer months.
''For that reason we are exploring other alternatives for Kaitaia,'' he said.