Omanaia resident Dallas Williams said she was relieved the council had taken a step forward in acknowledging a historic grievance but disappointed it had taken such a fight to make it happen.
The council had long got around its legal requirements to supply safe drinking water by declaring that the Omanaia water connections were for stock, not humans, and by issuing a permanent boil water notice to residents.
"What happened in Havelock North, that's us every day," she said.
The "unprecedented" level of funding from the Health Ministry showed it was seen as a risk to public health.
Mayor John Carter said the decision to go ahead with a new treatment plant was a milestone for Omanaia residents who have long had to boil their water before drinking it.
"I would like to acknowledge the hardship and injustice Omanaia hapu Ngati Kaharau and Ngati Hau have suffered for years and thank them for working constructively with the council to find a solution to this historic issue."
The design is due to be completed and a contractor appointed by October. Construction is expected to start in April 2018 with the new plant commissioned the following month.
The council is also planning to build more water storage to help keep taps flowing in summer when the Petaka Stream runs dry. Rawene and Omanaia are usually the first places in Northland to be hit with water restrictions in summer.
There's more good news for Rawene/Omanaia locals who will also get a rates refund of just les than $95 because the council didn't finish capital works it charged them for in 2016-17. Omanaia households will get a separate rates refund because the council has accidentally overcharged them since introducing a capital rate in 2013. Refunds will be credited to 2017-18 rates bills.
Govt: No more subsidies
The solution to Omanaia's water woes won't be available to other small Northland communities because the Government has ended the subsidies that made it possible.
Mayor John Carter said he was pleased the long-standing problem with Omanaia's water supply could be solved in a way that minimised costs for local ratepayers, but the district would have to discuss how it paid for future water schemes.
That was because the Government had withdrawn Health Ministry subsidies for water and sewerage upgrades. The subsidies had been aimed at making safe drinking water and wastewater systems affordable to communities with few ratepayers to carry the costs, such as Omanaia.
The Health Ministry's Drinking-water Subsidy Scheme started in 2006 and stopped taking new applications in 2015. Health Minister Jonathan Coleman has been asked for comment.