Skyline Gondola believes debris from its worksite contributed to flooding on Reavers Lane last month, Queenstown Lakes District Council says.
Torrential rain flooded the street with shingle debris, forcing the evacuation of 41 residents in the dark.
Ten homes were later red-stickered and two yellow-stickered.
Mayor Glyn Lewers said Skyline Enterprises had apologised and would remove the remaining debris on its site above.
Lewers said the destruction had caused distress and locals had a right to expect answers.
Further investigative actions were being discussed with the company.