Potentially harmful material stored at an old paper mill on the banks of Mataura in Southland had not been removed until now because the company's owners "literally got on a plane and went to Bahrain".
Gore District Mayor Tracy Hicks says removing the substance is a lot easier said than done.
"The company put it there without a permit [and] went into liquidation," he told Magic Talk's Roman Travers on Thursday.
Although there were concerns about the mill, just after 6pm on Thursday it was announced Mataura has reopened to residents
"We're just asking people to be careful, be sensible," Hicks told Newshub.
"There is still some water-sodden houses, and they will need to be treated very carefully."
He believes everyone in Mataura should have running water, but a boil water notice has been issued. A water tanker will be available from about 8pm.
Authorities on Wednesday were concerned about the potentially hazardous material in the mill amid the devastating floods.
"[The company] literally got on a plane and went to Bahrain and left the problem for everybody to fix up here," Hicks said.
The mill is in the flood zone and houses ouvea - a substance that, when mixed with water, creates the toxic gas. The material is stored in large, extra lined plastic bags.
Hicks told Magic Talk it was a big problem.
"It's got to go somewhere and actually finding someone who wants it is another issue.
"That has been fixed and there is a place where it's going.
"It's a slow process."
An assessment is being made by Fire and Emergency New Zealand on Thursday morning.
Earlier on Thursday, Southland farmer Chris Dillon told Magic Talk conditions had improved.
"The concern was how big it was going to get," he said.
"You've still got the mess to deal with - we're not relying on insurance."