Unfortunately this will not ultimately be up to the City Council to determine. Every single state in the US and the Federal government have set water quality standards and sadly the letter from Byron will mean very little in that regard. The emissions of the burnt fuel are one thing and the possibility of a release of raw fuel is also a consideration. Plus, if you plan to allow gasoline powered boats that is an entirely different situation. The way to address this is to look at what measures will be taken to avoid a spill, rather than try to convince them that a spill or release is OK.
The particular body of water will also play into it since where it goes and what it is used for will have a considerable influence on how much tolerance there is for the possibility of a negative impact from a release of hydrocarbons.
At some point I am certain that the City will have their staff look into what environmental regulations govern the use of the lake or ponds that you want to use. I do not what state you live in, but almost all states have their regulations online if you know where to look and what to look for.
In California we have the State Water Resources Control Board which oversees environmental and water use regulations for all the waters of the state. Other states call it the Department of Natural Resources, or the Department of Environmental Quality, and so on.
I would urge you to find out what regulations apply and to be prepared to address those regulations and the possible concerns of the City.
BTW - this is what I do for a living and I am basing my comments on the experiences I have had working with a wide variety of regulatory agencies.
