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Government and New Zealand Defence Force personnel have met iwi, business and community leaders to prepare for preliminary investigation and site visits.
More New Zealanders are expected to return in the coming months but, amid the Covid-19 pandemic, they are required to stay initially in managed isolation or quarantine facilities.
Isolation Minister Megan Woods will visit Dunedin on Friday to discuss the potential for a facility to open in the city.
So far, managed isolation facilities are being used in Auckland, Christchurch, Hamilton, Rotorua and Wellington.
After a series of escapes from such facilities, Dunedin Mayor Aaron Hawkins said he would seek assurances about security.
A Covid-19 response group spokesman said security had been increased at all managed isolation facilities. Police had a round-the-clock presence and fences were 1.8m high.
"In addition, a security manager will soon be assigned to all managed isolation facilities.
"The security manager will be responsible for site assessment, staff training, security oversight and co-ordination."
Every location had unique factors to consider and hotels had to meet strict criteria, he said.
"This is to ensure people staying and working in them are kept safe and so there’s a safe transition process for people back into the community after their isolation period."
Work on the feasibility of facilities in Queenstown was at an early stage, he said.