Lake Hawea residents are using the state of the town's wastewater treatment plant in their battle to stop a 400-lot special housing area [SHA] being built on the edge of town.
The plant, operated by the Queenstown Lakes District Council, has been non-compliant on a number of occasions since the Otago Regional Council granted consent in 2010.
The annual report for 2017-18 says: "the plant is not suitable for the current resource consent conditions".
"There is no design basis for the oxidation pond to remove nutrients reliably."
In a letter sent to the regional council this week, Hawea Community Association chairwoman April Mackenzie said the report "clearly shows" the plant was failing to comply and was not coping with the current demand, "let alone demand from growth of multiple new dwellings".
Ms Mackenzie said the community was "highly concerned" about possible pollution of the Hawea River and the Hawea Basin aquifer.