Tim Barnett, of Arthur Barnett Properties, told a resource consent hearing he proceeded with plans for the building at 41 Wharf St after meeting council representatives.
He had received "support and encouragement" for his plans to develop the site, but last November had another meeting.
"At that meeting it became obvious that the Dunedin City Council had completely changed their mind about the use of the land at 41 Wharf St," Mr Barnett said.
He was told the property would be taken for roading, and would be excluded from a "harbourside zone" the council was planning.
"My response at the meeting was total astonishment, given that almost two years had passed since the council's first discussion, without mention of the exclusion from the harbourside zone rules and designation of the whole site, and my clear intention was always to proceed with the development as Arthur Barnett Property Ltd had planned."
Mr Barnett's comments came as a resource consent hearings committee of city councillors Colin Weatherall and Andrew Noone, and commissioner Roger Tasker, sat to consider the development.
Last December, the company applied for consent to build a three-storeyed, 3105sq m office and residential building on land that was once part of rail shunting yards.
In January, the site was identified by the council as a possible road linking Wharf St with a new on-ramp to the nearby overbridge, and the council has a notice of requirement over the whole site.
That issue will have to be considered by the hearings committee when it makes its decision.
The consent application attracted five submissions, one supporting and four opposing.
The four opposed were Chalmers Properties, Port Otago's property division, Transit New Zealand and the New Zealand Historic Places Trust, but none of the submitters due to speak appeared.
The council's consultant planner, Andrew Henderson, originally recommended declining consent, in part because the site was zoned industrial, and the commercial and residential activities were non-complying.
Mr Barnett's counsel, Neville Marquet, told the committee the development would be "benign", its effects on the environment would be minor, and the existing industrial zoning was out of harmony with existing use and possible use if it was rezoned.
Mr Barnett's planner, Don Anderson, argued the development was "a true exception", which it was required to be if consent for a non-complying activity was granted.
He asked where else in Dunedin the committee could find vacant former railway land close to the harbour, tourism ventures and a restaurant, on land the council planned to rezone.
"The answer must be nowhere."
After hearing from the developer's representatives, Mr Henderson said issues he had with the project had been addressed, and he recommended consent could be granted.
Mr Marquet told the committee it was "bound to give consent".
The only complicating factor was the designation of the site as a road, but he argued under the Resource Management Act "it's not a matter of concern for this hearings panel".
Cr Weatherall reserved the decision, and said the committee would visit the site.
