Dams aren't typically designed to be able to just "dump all the water out". Water release is usually limited to amounts that areas downstream can handle. Sure, it can be on the high-end of what the waterways downstream can handle(even in emergencies the maximum is still limited), but you don't usually install a "doomsday gate" that can dump so much water it will cause massive flooding and damage downstream. Excess water is handled near the top of the dam, if you don't have enough water to reach it, they can't be used.
Not to say that this particular dam isn't capable of opening up so wide as to flood the city, but that would be really weird design.