The Environmental Protection Authority (EPA) fined CDL Constructions $8000 in early March for pollution in Franklin St late December last year.
Streams of sediment, turbid water and a haze of excavation dust were created by hosing the street and footpath next to the site.
The water entered stormwater drains, likely ending up in the Yarra River. The slush also posed a danger to pedestrians and traffic.
EPA Metro Region Manager Dan Hunt said it was “a disappointing example of construction firms failing to protect the environment during construction activities”.
“Construction firms are required to treat this kind of runoff to remove sediment to avoid blocking our stormwater drains or dispose of the water to sewers in agreement with the local water corporation,” he said.