When fire broke out at Bromley Wastewater Treatment Plant, Christchurch City Council's response was "poor and slow", an independent report says.
The fire in November 2021 badly damaged the plant's two trickling filters, affecting the quality of effluent flowing into the system.
This caused an unpleasant stench for neighbouring residents in eastern parts of the city.
The council is still negotiating a settlement with its insurer following the catastrophic blaze.
Affected residents have regularly complained about nausea, headaches, worsening asthma, sleepless nights and deteriorating mental health.
Some were described as at "breaking point" a few months ago, with locals lamenting the response from local authorities.
A Tregaskis Brown report leaked to RNZ highlights where the council's response was found to be substandard.
The report, commissioned by the council and understood to have been due out to the public on Friday, said the council had "poor or non-existent" relationships with affected residents.
The first five months following the fire was dubbed a "wasted opportunity", because the council reacted slowly.
"The seriousness of the situation wasn't acknowledged," the report said.
"The public communications showed little understanding of how bad the situation was getting - residents felt they were still trying to convince the council there was a problem."
The review delved deeper into the relationship between the council and residents in the eastern suburbs before the fire.
"This included perceived under-investment in earthquake repairs, odours from the organic processing plant, insect/midge infestations from the wastewater treatment ponds, and coastal adaptation discussions.
"Advocates for the affected communities reminded us that people who live in the eastern suburbs are assumed to be poor and uneducated, and perhaps this was why their concerns and experience weren't taken seriously by council."
The report highlighted poor communication, with the council seen to be "downplaying" the significance of the damage and consequences during a five month period after the event.
The council's use of "unpleasant odours" demonstrated a lack of empathy for suffering residents, it said.
"This minimising language and no recognition of the stress being experienced made the situation worse."
Last year, the council issued a well-being support package, with gift cards, to residents in more than 3000 homes living with the stench.
But the review found it was too slow in recognising the fire's impact on well-being.
"Given the terrible impact of the stench and the size of the area affected, it is significant that it took so long for the organisation to realise it was dealing with a major community well-being issue."
A total of 54 people were interviewed in the report, including affected residents, current and former councillors, iwi representatives, and council staff.
Representatives from partner agencies, including Environment Canterbury, Community and Public Health, the Ministry of Education and Early Learning Services, were interviewed.
The report described one resident visiting an adult child who told them their clothes had a bad smell.
"This was both embarrassing and worrying," the report said.
Another key finding was the council made mistakes in how it established its response and recovery teams during the immediate aftermath of the fire.
It initially established a small incident management team, before a steering committee was set up a month later.
It gave the impression this was a business as usual project, when it needed a co-ordinated incident management approach.
The report recommends an incident management response to large scale events and that the council strengthens ties to the communities of Bromley and other neighbouring suburbs.
"If the relationship between the communities of the eastern suburbs and the council had been in a better state, it might not have taken so long for the council to understand how badly these communities were suffering.
"The relationship needs to be rebuilt," the report said.
The council has been approached for comment.