A Ngongotaha resident has asked Rotorua Lakes Council to "pull the plug" on a proposed housing development after the site was left underwater during Sunday's floods.
However, Associate Housing Minister Jenny Salesa says "any flood risk can be mitigated through the site design".
Plans for a 190-home development in Ngongotaha were announced in mid March, and the council has voted to recommend the site as a Special Housing Area to Salesa to approve.
An owner of a neighbouring property, Patricia Hosking, said the area became "completely" flooded on Sunday.
"I was so concerned about the proposal ... I asked council staff to visit my farm and take a look at the stream and flooding issues.
"Around five to six times each year the Waiteti stream floods and water reaches the top of the banks but it does not overflow, it could easily with just a few more millimetres of rain."
Hosking said heavy rain events were becoming more common.
Salesa said she was aware the development would need to include mitigation measures for potential flood risks.
"A geotechnical assessment of the site concluded that any flood risk can be mitigated through the site design.
"The council has advised that the recent flood had minimal effect on the site, with most of the flooding occurring in another area of Ngongotaha, and any residual water on the SHA site has since drained away."
She said there were set requirements which included adequate infrastructure, demand for the development and demand for residential housing in the area when making a decision on the location of a SHA.
"In the case of the proposed Special Housing Area in Ngongotaha, the assessment of infrastructure will include adequate flood protection and provision for stormwater management."
Rotorua District Residents and Ratepayers secretary Reynold Macpherson said the council and ministers should "pull the plug" on the proposed development.
"The Ngongotaha flash flood shows that climate change is real. This event is not unprecedented.
"Please let common sense in Ngongotaha prevail. It's a miracle that no one was drowned this time."
Addressing media on Monday after the floods, Rotorua Mayor Steve Chadwick was asked if the council was satisfied it had all the systems in place to cope with such weather events in Ngongotaha.
"This is unprecedented here. I can't say that about the extraordinary weather events we have experienced this summer."
Before the floods, Progress Ngongotaha chief executive Lynn Benfell said in a statement the group supported SHA1.
"We are extremely lucky to have housing developers who have put their hands up to help us with our current housing difficulties."