Heavy rain on Wednesday night and Thursday morning sent sediment overflowing from the holding pond on the Willowridge Alpha Series one subdivision into Bullock Creek and surrounding wetlands near the former Otago Fish and Game Hatchery.
Otago Fish and Game chief executive Niall Watson said "we are continuing to question the performance of the stormwater system with the Queenstown Lakes District Council and we remain concerned about the run-off water being ponded on the hatchery property boundary and the spilling of silty water over the boundary."
"It is not clear whether the system, which is designed to discharge stormwater from the subdivision to groundwater, is fully operational but to expect a discharge to groundwater just above an area of springs seems unrealistic."
"It looks like the system requires a rethink," Mr Watson said.
The Wanaka Residents Association has been working on the restoration of the Bullock Creek wetlands for two years.
Otago Fish and Game officer Paul van Klink was on site when the stormwater holding pond burst its banks and contacted the residents association, Otago Regional council and the QLDC.
He said developer Allan Dippie and his contractors had visited the subdivision in the morning but left before the sediment overflow. Mr van Klink said the sediment would have a serious impact on the health of the creek as it would "smother the aquatic invertebrates and some of the aquatic life."
Touchstone community project founder and freshwater scientist Chris Arbuckle described the overflow as "a bit of a catastrophe for Bullock Creek".
When contacted by the ODT, Wanaka developer Allan Dippie said.
"There was a little discolouration in the creek for a couple of hours in the afternoon but no silt damage or flooding whatsoever, as we were able to settle the water and the creek was running very clear late afternoon with no further issues overnight."
QLDC communications adviser Jimmy Sygrove said the council was "disheartened" along with the rest of the community to see the state of Bullock Creek on Thursday. He said enforcement officers visited the site yesterday to investigate any breach of consent by the Alpha Series subdivision.