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The $1 million upgrade of Church St and Searle Lane is being re-tendered after the only two tenders submitted were over budget.
Queenstown Lakes District Council transportation planning manager Denis Mander told the utilities committee on Tuesday the council had decided not to accept either of the two tenders received for the project.
It had also decided to potpone the project until after Easter, following feedback from Queenstown businesses.
"The lowest tender is over budget. We are expecting lower prices because it will be a less pressing time for contractors," he said.
The work was expected to start after Easter next year.