Mr Vandervis said he also opposed that decision.
His understanding was the art work, which was still owned by Ms Rakena, would be in the Octagon for the duration of the Rugby World Cup and would be returned to her afterwards.
"We're paying $50,000 to rent a black penis in the Octagon? What's that all about?" Mr Vandervis said earlier in the week.
Mayor David Cull said the Haka Peep Show had been a marketing win for Dunedin.
He repeated his support for the project and said it the pleasure it had generated around the city.
"My observations suggest the feedback has been overwhelmingly positive, and I'm grateful to Ngai Tahu for offering us the opportunity to share in this thought-provoking art work."
The furore over the artwork escalated further this week, with councillor Bill Acklin vowing to lay a formal complaint over Vandervis's public criticism over the project, which breached he council's confidentiality rules.
Decisions on the funding of projects is supposed to be completely confidential.
Acklin, the subcommittee chairman, yesterday labelled Cr Vandervis' behaviour "absolutely disgraceful" and said he "absolutely" intended to lodge a complaint with Mayor Dave Cull.
Meanwhile the phallic artwork controversy has received international coverage, with American Huffington Post website carrying a story on the uproar, which included a quote from the artist Rachael Rakena that she had "thought about it long and hard before deciding" on the artwork.
- with Otago Daily Times