Transport planners and consultants have been developing options since 2022 for making St Andrew St safer and more suitable for pedestrians.
The street runs between the planned inpatient and outpatient buildings of the new hospital and it is also where State Highway88 ends.
The government asked for urgent advice from officials about either scaling down the inpatient building south of St Andrew St or not building it.
NZ Transport Agency Waka Kotahi though, did not confirm cuts to the hospital project had put a spanner in the works for finalising what to do with SH88.
"Given decisions on this project were unlikely to be made until 2025, there has been no formal pause on the SH88 St Andrew St project," NZTA regional relationships director James Caygill said.
The transport agency was continuing to work through options with the Dunedin City Council and Otago Regional Council with a view to making decisions next year, he said.
"We are still in the process of firming up an emerging preferred option with the Dunedin City Council, which can then be tested with the public."
This included the possibility of shifting the SH88 designation to a street further north, such as Frederick St, he confirmed.
In October 2022, the agency released a project update that also described issues in the area.
"We know there are challenges with SH88 St Andrew St," the transport agency said.
"It can be difficult for people, along with vehicles, to move around as they compete for space in a tight road corridor.
"We need to carefully consider how best to integrate the new Dunedin hospital into the busy SH88 St Andrew St area so it’s safe, enhances accessibility, and contributes to the health and wellbeing of people."
At that stage, a final decision on a preferred option was expected in late 2023.
In October last year, the agency expected to share a preferred option in February or March this year and to make a final decision on this by mid-2024.
The status of the project was brought up at a city council meeting this week, when transport group manager Jeanine Benson said it had been "fairly full steam" with the transport agency until three or four weeks ago amid the government’s hospital announcement.
Also brought up at the meeting was the likelihood of the government’s rules about setting speed limits becoming an obstacle for lowering the limit for traffic in St Andrew St.
The agency highlighted the speed limit in St Andrew St was 50kmh while the average operating speed was 28kmh.
It expected to release more guidance about speed limits on October 30.
A statement from Minister of Transport Simeon Brown signalled there was some wiggle room for setting speed limits.
The new rule standardised speed limits on urban roads to 50kmh and there were exceptions, such as 40kmh, for streets with high levels of pedestrian activity, he said.
"The government was elected on a promise to deliver a sensible approach to speed limits," Mr Brown said.
City councillor Carmen Houlahan said one way to improve safety would be having an air bridge between the inpatient and outpatient buildings and she challenged the government to consider keeping this in the plan.
