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In Melbourne, Australia, the adoption of Water Sensitive Urban Design (WSUD) and the inclusion of best practice in new urban development has shifted the "drained city" of the 1960s toward an environmentally-oriented "waterways city" for the future. However, the "waterways city" is tenuous owing to the variable commitment of local municipalities to WSUD. This paper reports on the first phase of a social research project, which aims to secure a model of the waterways city by addressing the commitment and capacity deficits of local municipalities. Municipal commitment and capacity across three geographical areas in Melbourne are measured quantitatively using an innovative, comprehensive, and replicable assessment technique. The results show variability in municipal capacity and commitment across the areas, with a pronounced deficit in the rural-regional area. Consequently, intergovernmental attempts to normalise modes of integrated urban water management (such as WSUD) need to include innovative and flexible mechanisms that are responsive to the dynamics of municipal commitment and capacity. These principles have broader application to cities internationally where the management of urban stormwater is the shared responsibility of multiple governments.