Encroachment of urban areas into forest and farmland is typically considered to have detrimental effects on terrestrial and aquatic ecosystems. Most restoration strategies for lakes affected by urban development represent expensive short-term fixes requiring on-going management, with long-term restoration requiring external nutrient inputs (typically the major impact of urban development) to be significantly reduced. This study details, using a simple nutrient budget, the effects of the conversion of farmland to native forest in a lake catchment (Waiwhakareke/Horseshoe Lake in the Waiwhakareke Natural Heritage Park (WHNP), New Zealand) during urban encroachment. I show how far-sighted planning employed by management authorities can lead to urban growth being beneficial to aquatic systems. Even using this method, however, managers should not expect lakes to become immediately available as amenities. Although reduction in external nutrient loads brought about by the reforestation of lake catchments in urban areas will ultimately lead to phosphorus reduction and concomitant water quality improvements, such responses may take a number of years due a continued release of nutrients from bottom sediments if they are initially within rural catchments. Urban management authorities therefore need to possess a long-term outlook and commitment to such projects. Overall, the WHNP project acts as a model for future urban development and spread of cities, providing opportunities for the long-term restoration and conservation of lakes.