The mayor of Tauranga is vowing to hold to account those responsible for the botch-up at the failed Bella Vista housing development.
Twenty one homes were eventually declared dangerous or not up to scratch and had to be abandoned.
The council failed to follow its own rules including allowing construction to go ahead after earlier, failed inspections had not been fully resolved.
The report stated that staff just below senior management found the most significant reason for the failure was having one inspector deal with the developer.
That inspector had a conflict of interest because he also had a house being built by Bella Vista at the time.
This was known by the council well before he was appointed.
Also some staff felt like they were not able to escalate concerns because all the decision-making was being done by one person.
Tauranga mayor Greg Brownless admitted they dropped the ball.
But he said the council was conducting its own employment investigation and things will change.
"We have an employment process now and we've had a number of changes in staff and the organisation and I'm pretty confident that there's no chance of it happening again," he said.
He would not say how many staff were being scrutinised.
"By the end of the process, it will be my expectation that those who have had involvement in the poor performance should be held to account and I've asked my chief executive to look into that," Mr Brownless said.
The Ministry of Business, Innovation and Employment has ordered the council to make nine changes - including improving the handling of conflicts of interest and vetting building consent applications.
Spokesperson Paul Hobbs said houses in Tauranga were also being built on slopes and hills - like Bella Vista - and that makes engineering more difficult.
He said other councils need to heed that.
"If you're having to deal with sites that are unfamiliar and doing a lot more excavation then there's an increase in the risk so I think it's just monitoring those sorts of things," he said.
The Tauranga City Council now has two months to show the ministry its updated procedures.