Napier City Council says it's frustrated it had to hand a dangerous dog back to an owner who did not properly restrain it.
The council reluctantly released the two-year-old pit bull after a Facebook campaign raised about $530, enough for the dog to be freed from the pound.
The dog went on to kill a seven-month-old shar pei only a few days later on 21 March at an address where it was chained.
Regulatory services manager Michael Webster says a second dog control officer was needed just to comfort the traumatised children who witnessed the killing.
"Our lady dog control officer spent quite a considerable amount of time with the kids, just calming them down; giving them a cuddle and helping them to get over what they'd witnessed."
Mr Webster says the pit bull had not been secured well, and was able to break free.
He says when the dog was in the pound it was noted to be friendly with people, but aggressive with other dogs, and the owner was advised about its tendencies when it was released.
Mr Webster told Radio New Zealand's Morning Report programme on Monday the dog was being held pending an investigation into the incident and the council might decide to prosecute. "The end result is that if the dog was determined to be at fault then the judiciary may decide we are able to put it down."
SPCA Auckland executive director Bob Kerridge said earlier if council staff thought the pit bull was dangerous, it should not have been released.
Mr Kerridge said local authorities had powers under the Dog Control Act to make special provisions for dogs that showed aggressive tendencies.