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Late last week Cook Brothers Construction and Oakley Gray Architects were told of the decision by the West Otago Health Trust.
The announcement followed a lengthy planning and fundraising process.
In May 2010, a feasibility study estimated construction would cost between $5.2 million and $5.9 million.
However, trustees and the directors of West Otago Health Ltd - the company which runs the existing medical centre - reviewed all aspects of the project early last year, resulting in a revised budget of $2.6 million which included a 10% contingency fund.
The trust began advertising for expressions of interest in the design process in September.
West Otago Health Trust chairman Allister Body said the trust was amazed to receive 18 formal responses by the cut-off date in early October, shortlisting four to proceed to the design stage before selecting Cook Brothers Construction and Oakley Gray Architects.
Mr Body said trustees were excited to see the project finally get under way.
''The successful design came under budget at $2.422 million and they followed the design brief the closest. It's looking really good.''
The project was now in the 14-day consultation and preliminary design stage, before moving into design development later next month.
The design's estimate would then be revised in April before beginning the consenting process.
Mr Body said construction could begin as early as July.
Fundraising and grants totalled nearly $2.4 million, but more money was needed for equipment and landscaping.
The Clutha District Council will provide $1 million, funded through a rate of about $88 throughout the West Otago Health service area over 25 years.
West Otago ward councillor Michelle Kennedy said the announcement was positive for the community.
''It's a great project and the community is right in behind it.''
The new medical centre, to be built on the grounds of the former Tapanui Hospital on State Highway 90, will include a 14-bed rest-home, and will be primarily aimed at offering the district's elderly residents a chance to stay in the town instead of in facilities in larger centres.
The centre will provide health services to more than 2000 people in West Otago and outlying areas, serving an area from Waikaka across to Pukerau in the south, and Moa Flat to Raes Junction in the north.
Any group, from families, companies or people in a street, was welcome to sponsor any of the 14 rooms still available to be sponsored.