The project has been delayed since March on advice from the Historic Places Trust, which required the Dunedin City Council to undertake an archaeological assessment of the site by an approved archaeologist, because there may have been a building there at some time in the past.
Despite an archeological report finding no evidence a house once stood on the site, it recommended an alternative location be found for the garden.
The writers of the report stated they were aware there were few potential other sites.
If another location could not be found, the council should apply for an archaeological authority from the trust to excavate the site, the report, prepared by Southern Pacific Archaeology Research (Spar), said.
The delays could mean those who raised funds for the garden, which benefited from a substantial bequest, will have to raise more money.
Nancye Sime, a noted chrysanthemum and rose judge who died in 2004, aged 87, left a substantial sum to the Dunedin City Council, with instructions it be used for the new garden.
Dunedin couple Dick and Barbara Calvert donated $40,000 to start the appeal, and money was also raised by the Friends of the Botanic Garden.
Plans for the elaborate terraced garden, to be sited between the existing rock garden and the upper garden area, include a viewing platform, a fountain, seats and Mediterranean plants and trees.
Several city councillors expressed concerns yesterday about the direction of the trust, but community development committee chairman Cr Paul Hudson said he would not comment, as councillors had not formally discussed the report. The council is being taken to court over alleged breaches of a trust archaeological authority for the council's Wall Street development in George St.
Trust Otago-Southland area manager Owen Graham could not be contacted, and southern regional manager Malcolm Duff said he did not know enough about the issue to comment until today.
The report said the garden site had been identified as the location of the Acclimatisation Society manager's house, built in 1865. "We are not able to find any primary evidence to either support or contradict this identification."
The terrace where the garden was to go "is about the right size for a small house".
Council community services and recreation manager Mick Reece said while the report recognised moving the garden might not be feasible, the trust did suggest the council could engage in a process for a consideration for exemption. That could take three months, with no prospect of success.
"We know it [the garden] is not going to be achieved within the time-line. We've got a tenderer waiting to start work.
We're going to have to abandon the tender, and we'll be looking at extra costs."
Garden designer Mick Field said the trust's actions "bordered on frivolous".
"Where are we going in the world?" he asked.
"The council will be forced to go through a process that will cost more money, and for what purpose?"
Friends of the Botanic Garden president Nicola Holman said the issue was disappointing.
Costs of concrete and steel were rising, and the delay meant more funds may have to be sought.
"This is a real nuisance factor. It does seem frivolous."
Spar director Chris Jacomb said concerns the report recommended the garden be built in an alternative location, when there was no primary evidence the house had been there, were "fair comment".
While the site was not of "outstanding importance" archaeologically or scientifically, it was a tangible reminder of the early history and pre-history of the garden.
More research could have been done to establish concrete evidence of what had been there, but that would have led to more delays.
Mr Jacomb said if the garden could not be moved, the report left it open for the council to build it on the planned site.
