Optimizing the utility of constructed waterways as residential development with water-frontage, along with a productive and functional habitat for wildlife is of considerable interest to managers. This study examines Lake Hugh Muntz, a large (17 ha) freshwater lake built in Gold Coast City, Australia. A ten year water quality monitoring programme shows that the lake has increasing nutrient concentrations, and together with summer algal blooms, the lake amenity as a popular recreational swimming and triathlon training location is at risk. A survey of fish and aquatic plant communities showed that the lake supports a sub-set of species found in adjacent natural wetlands. Sediment contaminants were below the lower Australian trigger values, except As, Hg, Pb and Zn, probably a function of untreated and uncontrolled stormwater runoff from nearby urban roads. Sediment biogeochemistry showed early signs of oxygen depletion, and an increase in benthic organic matter decomposition and oxygen consumption will result in more nitrogen recycled to the water column as NH4(+) (increasing the intensity of summer algal blooms) and less nitrogen lost to the atmosphere as N2 gas via denitrification. A series of catchment restoration initiatives were modeled and the optimal stormwater runoff restoration effort needed for lake protection will be costly, particularly retrospective, as is the case here. Overall, balancing the lifestyles and livelihoods of residents along with ecosystem protection are possible, but require considerable trade-offs between ecosystem services and human use.