While this has pleased opponents of the proposal, there has been widespread disappointment at the loss of court space - a shortfall which the facility was hoped to address.
Given the number of setbacks in getting the facility approved, even its long-time champion, the Ramblers Cycling Club, is expressing doubt over its future.
While the current business case could be put aside, the option is open for the council to take a revised business case to Sport NZ in the future if there was community demand.
When asked if he would advocate for the facility to be revisited, club chairman Don Kennedy said he thought the club would be reluctant to put more money into a velodrome bid in the future, and should instead concentrate on their own club activities.
The club had intended to put more than $90,000 toward the proposed facility, which they said would attract not only cyclists but other groups in the region.
"Because [of] just what's happened now there's a lot of effort, a lot of angst, and no real gain.
"I wouldn't be surprised if in the future if it comes back on the table, we'll look at it but I think members are getting to the stage that they're just about over it really."
A majority of members were disappointed the facility looked unlikely to go ahead, but Mr Kennedy said he thought the loss of a velodrome was not a "setback in any way for cycling in Hawke's Bay".
"Hawke's Bay's in really good shape, a velodrome would have just been a bonus rather than taking away what we've already got."
If the facility were shelved, Sport Hawke's Bay chief executive Mark Aspden said this would mean "we're back to the drawing board for indoor court space".
"It's a time to do a bit more options analysis, now the multi-use sports facility's off the table and go from there. Certainly there's no question the demand's there for indoor courts."
It was a good opportunity to have a regional discussion about whether it was more important to have a single large facility, which could attract national scale events, or to have smaller facilities closer to their respective communities.
It had been proposed the facility be located near the Taradale Pettigrew-Green Arena. Former Arena CEO and velodrome critic Brendon Rope said while he was pleased the velodrome would not be going ahead, but was concerned the rest of the project could also be shelved.
"The community needs more indoor courts, they have done for quite some time," he said. "I think the velodrome has distracted everyone's focus on the actual real need."
Given the shelving of the facility would release some funds, Mr Rope said he thought the council should build an indoor sports facility by extending the arena, "because that's essentially what it was going to be, just without the velodrome."
When asked if the council would be doing anything to address this demand in the short term, Napier Mayor Bill Dalton said his understanding was that the PGA trustees were looking at plans for additional court space.
As a part owner of the site, Mr Dalton said they would allow them to proceed with some plans, after which point the council could be requested to provide funding support.
He said he understood disappointment around the potential shelving of the facility.
Although this recommendation was just made this week, Sport New Zealand informed the council it did not support the project in a letter outlining its reasoning in June and it was discussed with councillors six weeks ago.
Without the organisation's endorsement, the council had little chance of raising the necessary funds for the project.
When asked why it had taken so long for this recommendation to be made, Mr Dalton said it was because council staff and the project's working team had disputed some of the claims made by Sport New Zealand and had been trying to resolve these.
Some of the claims at issue including consultation with Maori, and some of Sport NZ's claims about cycling, "which even Cycling NZ disputes".
"So there were a number of things which they took issue with which they took up with Sport NZ and those issues have not been resolved," he said.
"At the end of the day it became prudent - with other issues we've got on our plate - to recommend to the council to pull the situation."
There had been numerous delays in getting the facility approved by the council. The project was put on hold last year, so any decisions could be made on it by the council elected after the local body elections.
It suffered another setback this year, when a paper seeking council support to proceed with the next phase of the facility was withdrawn from a council agenda as councillors had "serious reservations" and unanswered questions on the facility, and as Sport NZ stated it did not support the facility in its current form.
