Council bosses have admitted that their plans to borrow £20m to help get new homes built could result in less spending on schools and other major infrastructure schemes.
Under the proposals, four Norfolk authorities intend to take out loans to help kickstart housing projects stalled for more than a year because of concerns over their impact on the environment.
The plan comes at a time of sharply rising interest rates and the loans are likely to have to be repaid from a fund normally used to provide infrastructure near new housing developments, such as schools, cycle paths and sports and recreation facilities.
Senior officers accept the strategy could be "risky", but insist it is necessary to reinvigorate the housing sector and spur economic growth.
WHAT IS THE PROBLEM?
Housebuilding across large parts of the county has been all but suspended for more than a year by an issue known as nutrient neutrality.
This meant councils were blocked from granting planning permission for homes until they could address concerns that wastewater pollution from new developments could add harmful nutrients to the Broads and the river Wensum.
Officials believe they have developed a system which will allow new housing to be built, but say they need to take out the huge loans to get it up and running.
WHAT IS THE SOLUTION?
The councils believe they can unblock the logjam through a joint venture company set up with Anglian Water.
That company, called Norfolk Environmental Credits, will allow housebuilders to 'offset' the pollution impact of their developments by buying 'credits' to fund mitigation measures, such as wastewater treatment works, septic tanks and natural schemes.
Councils hope to get £13m from the government towards the costs, but they also intend to borrow money to get it up and running.
WHERE WILL THE MONEY COME FROM?
The councils plan to borrow the money through a government mechanism which offers lower-than-normal rates.
The scheme was approved at a recent meeting of Greater Norwich Growth Board - made up of Norfolk, Norwich, South Norfolk and Broadland councils.
The authorities agreed to commit to the principle of the new joint venture applying to borrow up to £20m.
While acknowledging the risks, senior councillors and officials supported the project.
Graham Nelson, executive director of development and city services at Norwich City Council, said the move could help solve the "real strategic threat" to Norfolk's growth.
John Fuller, leader of South Norfolk Council, said it was a "really good approach".
He said the full £20m would not be borrowed for nutrient neutrality and other applications for funding could be made for other projects.
READ MORE: Jobs warning over delays to getting new Norfolk homes built
Kay Mason Billig, leader of Norfolk County Council and chairman of the Greater Norwich Growth Board, said: "I think it's very important that we do get on with this.
"If we can start this summer, it will take the pressure off the construction industry and our backlog of planning applications, which has to be a good thing."
WHAT SCHEMES COULD SUFFER?
Loan repayments could come from a fund set up to use money raised through community infrastructure levy - cash councils get from housing developers.
It is usually spent on building facilities needed to accommodate housing growth.
Money from it has recently been used on a variety of projects, including £4m to expand the Ormiston Victory Academy in Costessey, the Kett's Country long-distance path from Wymondham to Norwich and £250,000 towards the new 3G full-sized football pitch at the Football Development Centre in Bowthorpe.
Mr Nelson warned similar projects in the future could be affected, depending on how much has to be paid back for the borrowing to tackle nutrient neutrality.
He said: "We will need to carefully model the impact on the infrastructure investment fund that will meet the repayments on the borrowing that is done, at least in the short term.
"And, clearly with interest rates as they are, we need to be careful about what that does in terms of the Greater Norwich Growth Board's ability to fund infrastructure such as investment in schools. That could be affected by it.
"We will need to very carefully assess the risks and how they are going to be underwritten, in terms of onward lending to the joint venture."
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here