The council approached Kiwirail about the idea after Cr Benson-Pope suggested in May having a level crossing over the rail line next to the Chinese Garden as a cheaper alternative to building a bridge or tunnel.
Councillors unanimously supported the council investigating the issue, but when approached, Kiwirail cited safety concerns as a reason not to go ahead.
In a letter sent to council chief executive Sue Bidrose in August, Minister for State Owned Enterprises Todd McClay said he had been advised by Kiwirail such a crossing was ''untenable'' because it crossed operational rail yards and the cost of moving such facilities would be prohibitive.
Asked by the Otago Daily Times if it was willing to compromise on the issue, a spokesperson said it did not support the crossing.
''[Kiwirail] has a policy not to open any additional crossings but would support alternatives ... such as an overpass or an underpass.
''We regard this as a safety issue and we are not willing to compromise public safety.''
Cr Benson-Pope called Kiwirail's position ''illogical''.
He understood its safety sensitivities, but said it would be possible to install a ground-level crossing which was safe and did not interrupt operations.
This could be done by not operating during peak times and having the crossing completely secure.
He was not ready to give up on the plan, despite Kiwirail's firm response and would be raising it with them again.
''If they continue to be obstructive ... then I will respond to the Minister [again].''
