Redeveloped their extremely handy water source (7)
I believe the answer is:
hydrant
'water source' is the definition.
(I've seen this before)
'redeveloped their extremely handy' is the wordplay.
'redeveloped' is an anagram indicator.
'extremely' says to hollow out the word (remove centre letters).
'their' with its middle taken out is 'tr'.
'tr'+'handy'='trhandy'
'trhandy' is an anagram of 'HYDRANT'.
(Other definitions for hydrant that I've seen before include "Outlet from water main (for firefighters etc)" , "Upright water pipe in the street" , "Water source" , "Water point for firefighters" , "Outlet from water main for connecting to hoses" .)