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That was despite one Dunedin city councillor expressing disappointment at delays upgrading the heritage building, and calls by another for the building to be offered to a community group instead.
The debate came at a recent Dunedin City Council community development committee meeting, as councillors voted to push back the museum's January 1 deadline for completing the work by more than one year, to March 1, 2013, while charging $12,000 in annual rent from next year.
The council-owned building has been vacant for more than three years, since the Otago Art Society moved to the Dunedin Railway Station.
In June last year, following a registration of interest process, the council granted the museum a lease to use the building for conferences, functions and exhibitions.
The building was to be given a $1 million upgrade by the museum and be ready for use by January 1 next year, when annual rent of $12,000 was to begin.
There have been few signs of progress since, prompting a council staff report to Wednesday's committee meeting confirming the deadline would not be met.
The report, by council reserves policy and planning officer Paula Gunn, said the museum had confirmed "cost revisions and unforeseen delays" meant the building would not be ready in time for the original deadline.
The justifications were "realistic" and should be accepted, with the deadline moved to March 2013, but rent should begin next year as scheduled, her report recommended.
Councillors agreed, despite opposition from Cr Teresa Stevenson, who argued the museum had not met the requirements of the lease but was preventing community groups from using it in the meantime.
"I don't feel like this space is being as well utilised as it ultimately could be. Therefore, I would rather go through the process of finding someone else who could utilise it better."
Cr Fliss Butcher said a Dunedin youth group had also previously expressed interest in using the building as an alcohol-free safe area.
"I'm really disappointed to see the Otago Museum can't get their act together and make this happen," she said.
However, Cr Syd Brown said the museum was spending a "considerable" amount of money to upgrade the heritage building, with input from the New Zealand Historic Places Trust and a heritage architect.
Any other organisation wanting to use it would also need to spend "major" amounts of money making it safe and code-compliant, he said.
"It's not a plum sitting in the middle of the city . . . hopefully, in a very short period of time, it will deliver an amenity to the city through the building by the Otago Museum," he said.
Council community and recreation services manager Mick Reece told Wednesday's meeting the ability to meet the original January 1 deadline was not the main criteria assessed when granting the lease to the museum.
Instead, the decision was more about the quality of the refurbished building that would result in the longer term, he said.
There had been "a certain amount of pressure" placed on the museum to progress the redevelopment plan, "but also a certain amount of responsibility" to ensure community groups allowed inside in the meantime looked after it.
"That has made them cautious," he said.