A company contracted to look after Dunedin's stormwater network said it warned the council about the infrastructure's poor condition before last year's damaging flood.
An investigation by the Dunedin City Council, prompted by the flood, has found many of the tanks that drain water from roads are blocked.
The mud tanks catch debris that washes off the road and allow rainfall and floodwaters to drain into the stormwater system.
Last June, more than two months worth of rain came pouring down in just 24 hours and South Dunedin's drains couldn't cope.
Just over 1200 properties were flooded and 280 families had the miserable job of clearing out ruined carpet and furniture and trying to dry out sodden homes.
Fulton Hogan held the council contract to look after the stormwater network. It said it warned the council four months before the flood that effective maintenance was a challenge due to the age and historical nature of the network.
The company said it was confident it met all the requirements of its contract.
It had worked for the council for the past two years and had passed numerous performance audits.
At the time of the floods, Fulton Hogan told the council 30 percent of the tanks in South Dunedin - the worst-hit suburb - were blocked, which was over the allowable limit in the contract.
But, in last month's inspection, the council found 75 percent were not working properly and more than a quarter of those were completely blocked. It had to remove about 230 tonnes of debris.
Julie Myers and her husband still can't use the living room and one of the bedrooms in their house and are waiting for a building consent from the council.
Mrs Myers was furious that blocked drains could be partly to blame for the damage to their home.
"Particularly paying $2500 for a consent for something that wasn't just a flood and [the council] had some culpability to that. Bottom line is that it pisses me off," she said.
Dunedin City Council infrastructure general manager Ruth Stokes said she did not know why there was such a massive difference between what the council discovered and what Fulton Hogan had been reporting.
"We are talking to our current contractors and saying 'look guys, we've found this, and it's obviously quite different to what you've been telling us over these years'," she said.
"The mud tanks have actually indicated that we have issues with the information that we receive from our contractors, so there's a much bigger conversation going on with them about the whole contract administration and management."
The council said that for "a whole variety of reasons" it decided not to renew a contract with Fulton Hogan. The work is being put out for tender.
But Ms Stokes said given the huge amount of rain, it was hard to know whether fewer houses would have been flooded if the tanks had been working properly.
"Because there are so many variables at play, it is impossible to identify whether there was any localised impact due to mud tanks that couldn't operate correctly. The amount of rainfall in South Dunedin exceeded our system's capacity for 17 hours."
Labour's Dunedin South MP Clare Curran said the council needed to take some responsibility for the infrastructure failure.
"I'm concerned that there was no monitoring of the contract. Don't forget that this was not a small event, it was an event that affected a big community and therefore the community does need answers," she said.
Dunedin City Council said it was still working with Fulton Hogan to make sure the rest of the mud tanks around the city were not blocked. The tender process for the new contract ends next week.