Mr Jefferies said the additional funding is great news for the Katikati community.
"When we started thinking about building a new library in Katikati, the community hub was an integral part of the overall concept, so it's fantastic that it can be included in the original build."
Undertaking the project as a single build rather than in two stages is more cost effective for design, consent and build costs, with no demolition and no disruption to the library, Mr Jefferies said.
Indicative savings range between $100,000 and $150,000.
The community hub will be designed as a multi-purpose community space that could, if desired, include space for bookable meeting rooms, a technology centre and exhibitions or displays.
"We'll be inviting Katikati residents to have their say on what they'd like this space to be used for, and how, in the near future.
"These discussions will also include ideas for the future use of the current Katikati Library building, and give people their first look at the design concept."
Councillor Mike Williams said the library and hub complex is a very important building and will be an anchor for the town.
Councillor Peter Mackay said Katikati is really going ahead and it makes sense for the hub to be added to the library project.
Council appointed Tauranga-based firm First Principles Architects to design the library and community hub, to be constructed on the former Dunning Block at 21 Main Street.
The design will be finalised in June and the project will go out for tender and award in July and August. Construction is expected to take about eight months.