There are Goombas floating around in inner tubes in this water park. Walk towards one of the corners, into a hole in the rock. The first gem is here. Go underwater and take the blue pipe up, then the red one. You'll drop down onto a P-Switch which will make the water rise and cause some platforms to float. Drop down into the water and take the yellow pipe up. Go through the branch to get the second gem. Go up through the yellow pipe and walk towards the red pipe. Drop down to an area with Cheep-Cheep and the third gem. Return to the surface with the yellow pipe and cross the plank bridge to some plants. One of them has a pickax you can use to defeat the Goombas or break the bricks near the yellow pipe for a Gold Mushroom. From there, just walk up the steps to the Star.
Special Challenge: Defeat all of the Goombas.