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Port Otago and the Dunedin City Council yesterday announced a project to restore sand to the beach, about 2km from Taiaroa Head, and redevelop the adjoining reserve.
The community has pushed for beach restoration for 10 years, but faced changes and setbacks.
The beach lost sand over the past century and some facilities have become run down.
The council pledged $900,000 from existing budgets towards restoring the reserve, which it owns.
Port Otago favours the installation of three large rock groynes on the beach.
Chief executive Kevin Winders said a design by Beca costed the project at $1.4 million to $1.6 million, although the final price would depend on consents and how it fit with council work.
The beach restoration would be funded by Port Otago, the Te Rauone Coast Care Committee and wider fundraising.
The overall project is expected to be finished in three years.
Port Otago would dredge sand from the harbour and use it to ``man-make a beach'', Mr Winders said.
After the initial project it would re-sand the beach as required.
It was ``fantastic'' the city council agreed to revitalise the reserve, he said.
He also commended the community who had done a lot of work to get the project to that stage, he said.
A start date for work would depend on consents, but it would be ``fantastic'' to have those granted by the end of the year, he said.
Council chief executive Sue Bidrose said the work was necessary as the beach was both an important cultural and tourist site, but some of its facilities had ``seen better days''.
``It's at a really great location just before [the] albatross colony, which is a stunning piece of our tourist offering.''
The beach had a strong cultural history in Dunedin, located next to the Otakou marae, she said.
The form the reserve work took would be based on more consultation with the community.
This will begin with a pop-in public consultation session 11am to 2pm Monday at the Otakou Marae.
The council did planting work on the reserve a few years ago, but it had not stayed ``top of mind'' since then, she said.
``Because they're spending lots of money on building groynes it makes sense to have a fabulous park so that people can go there, it can be a bit of a destination.''
The reserve is a grassy area, with banks which have become overgrown.
Te Rauone Beach Coast Care Committee chairman Graeme Burns said the community was ``thrilled'' to see action after about 10 years.
``We've had a change from the original concept, and some frustration because of the time it has taken.''
The reserve work would require a lot of landscaping, but could also include barbecues, more toilets and ``children's activities'', he said.
The project will be overseen by a working party including council and Port Otago staff, local runanga, the Te Rauone committee and the Peninsula community board.