Requests for an upgrade started when the owner of Elsie Evans, Shem Sutherland, proposed using his vessel to begin a ferry service from the jetty.
In 2007, the council supported a project to reclaim land, relocate boat sheds and build a new jetty and ramp near existing coastguard facilities.
But recently identified problems mean $500,000 the council set aside for the project was removed yesterday from the 2010-11 budget, and the project sent back to staff to be reassessed, before going back to community boards and council committees.
New information in a report yesterday showed the rough order of costs to estimate a price for the jetty had been used successfully elsewhere, but were not necessarily appropriate for the location.
The report, from council community life general manager Graeme Hall, said expert opinion on the project was sought in April.
That showed the nature of the seabed was unknown, and a full geotechnical investigation would be required.
The potential changes to piling and other aspects of the design meant there were "significant cost risks and possible matters that may well require a total re-think of the project".
As well, the project did not fit in with reclamation and road widening planned by the transportation department for the 2014-15 year if the jetty was to be upgraded earlier than that.
Mr Hall told the council yesterday: "We should have been more robust. We should have picked this up a wee bit earlier."
His view of the issue was backed up by Cr John Bezett, who said the council had "got this badly wrong".
"We're going to take some criticism. This will be very disappointing for some people."
Cr Paul Hudson said he was not sure if Elsie Evans would be able to use the existing jetty, and how the loss of the project would affect the coastguard vessel.
He suggested leaving $100,000 in the budget for investigations and consents, and possibly for a pontoon Elsie Evans would be able to use in the meantime, and the council voted for that option.
Cr Kate Wilson suggested the council liaise with the Otago Regional Council to look at recreational and access issues for the harbour, which was also approved by the meeting.
