The old septic tank, along with septic tank overflow from another shop, was discharged to a field next to the bore, so he asked the Far North District Council if the wastewater could instead be pumped to unused council land about 35 metres further away.
The land had been set aside for an effluent field for public toilets that have since been removed.
The council commissioned a report by consultants CH2M Beca, which found a "medium to high" risk of groundwater contamination from existing effluent fields.
Even moving Mr Clement's effluent field to the council reserve, beyond the 20 metres required under Northland's Regional Soil and Water Plan, might not be far enough given the area's topography and poor drainage.
The report's authors noted that the 2016 campylobacter outbreak in Havelock North, which made 5500 people ill and contributed to four deaths, was caused by sheep faeces in a pond 90 metres from a water bore.
Mr Clement said it was ironic that wastewater continued to be discharged in the old septic tank field about three metres from the bore, because 35 metres was not far enough away if it was moved.
The FNDC referred to a report from a December 2017 meeting in which Mr Clement's request to use council land was rejected, stating that, according to the Beca review, the proposal would not reduce the risk of groundwater contamination even if it moved the effluent field further away from the water supply bores.
Councillors were also concerned about the precedent if private businesses were allowed to dispose of treated wastewater on to council land without public benefit.
The current bore was drilled in 2016 after an older one failed. It is about 60 metres deep and supplies about 150 people, mostly on nearby Mawson Ave.
The DHB said the water supply more than met national drinking water standards. NRC regulatory services manager Colin Dall said the new bore, consented in 2016, reduced the risk of contamination because it was deeper than the old one and cased to a depth of 30 metres.
The Beca report authors concluded that moving Mr Clement's effluent field on to the council reserve would be an improvement in terms of distance from the bore, but it also increased the risks of overland flow, and in the long term it "further locked in poor sewage disposal practices in Waipapa", which were due for a wider review.