A proposal to build a velodrome and multi-sports facility has been removed from the Napier City Council's agenda after Sport New Zealand "stymied" the project, Napier mayor Bill Dalton says.

First mooted two years ago, the $22.9 million facility was scrutinised from its inception as many baulked at the cost of accommodating a velodrome for cycling.

Yesterday Napier City Council chief executive Wayne Jack informed the mayor and councillors the facility's business case should be "parked" and allocated funds be considered for relocation towards other projects.

"We've left it on the table just until some further information is developed by national and regional bodies in the future, but it gives council an opportunity to focus on other projects ... we can come back to it in the future."

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Sport New Zealand informed the council they did not support the project in a letter that outlined its reasoning in June and was discussed with councillors six weeks ago.

Mr Jack said the result was "disappointing" as Sport New Zealand had been involved since the start of the project.

Without the endorsement of the organisation the council had "no show" of raising the necessary funds for the project, Mr Dalton said.

"They told us not only were they highly supportive of the project [but] they would help us with funding applications. That was on the Tuesday and on the Friday we got a letter saying that they no longer support the project,

"It stymied the project, that's the simple thing. So the decision is to move forward. There's plenty of other things to do and we will do and so we'll just move forward and be positive."

Sport New Zealand's general manager of community sport Geoff Barry said at no point did his organisation support the project; rather supported them to develop a draft business case.

"We were fully engaged. This conversation around whether we supported it or not clearly couldn't happen until we got to a formal situation as to the final business case and then our own considerations. We never got to that stage."

Mr Barry said Sport New Zealand hadn't stymied the process and that it was clear both parties hadn't understood one another and hoped they would share responsibility for the misunderstanding.

"We are going to go through a learning process ... we obviously need to be clearer and the party in this case, Napier City Council, can't assume,

"We haven't stymied the process. I think that we've been involved in a process and the Napier City Council are reflecting, I think, on the fact that they had an interpretation or perception that we were supporting the project and at no stage have we supported the project in the way that they say we have."

With a price tag of $500,000 the business case is to be put aside and a paper to this effect was being prepared ahead of a council meeting on August 30.

However Mr Jack said the council had "flagged the option of taking a revised business case to them in the future, if there's community demand. By then, Sport NZ will have completed their velodrome strategy as well, which could be helpful."

Both Mr Jack and Mr Dalton expressed indications the projects allocated funding would be put redirected to aquatic projects through the Long Term Plan process.