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The library, sited at the Dunedin College of Education complex in Union St and used mainly by student teachers and Otago Polytechnic students, was inherited by the University of Otago when the college of education and the university merged at the beginning of last year.
One of the sticking points with the merger was the continued use of the library by two institutions and who would fund a much-needed upgrade.
But those problems were solved by negotiations and a $6.25 million government grant to fund an upgrade and other college of education building work.
The University of Otago has completed a feasibility study into library upgrade options and is developing a capital expenditure proposal.
The options were still being evaluated, university property services director Barry MacKay said.
"Accordingly, it is too early in the process to say anything meaningful about what the work would involve, what the timeline would be, or how much it would cost."
However, polytechnic academic director Dr Robin Day, who is a member of the joint library committee, said yesterday he was encouraged by the progress.
"An upgrade is timely . . . It has been on and off the books for many years."