The city council has rejected a proposal to create off-street parking in Addington to make up for the loss of more than 300 on-street parking spaces.

City councillors have baulked at spending $1.5 million on providing off-street parking in a busy industrial area of Addington.

The Riccarton-Wigram and Spreydon-Heathcote community boards wanted the council to spend the money so that it could off-set the loss of more than 300 on-street parking spaces, but failed to convince councillors it was the right course of action.

The parking is being lost because the council is planning to upgrade Annex Rd, Birmingham Dr, Wrights Rd and Matipo St to improve road safety and allow for increased through traffic that will result from the planned Wigram-Magdala overbridge.

The upgrade is costing $11.3 million but will result in the loss of 314 on-street car-parking spaces. The greatest loss of parking will be in Birmingham Dr (down from 172 to 50) and Magdala Pl (down from 134 to 34).

Businesses in the area have raised concerns about how that will impact their staff and customers. The Department of Corrections has also questioned the plan. It runs a centre in Annex Rd for offenders who have received non-custodial sentences and has raised concerns about staff and community safety should their clients and staff have to park further away from the centre.

To address those concerns the boards wanted the council to create 92 off-street parking spaces on Marylands Reserve, off Birmingham Dr, and to lease other available land in the area for parking, at a cost of $1.5m.

But council staff were opposed to providing off-street-parking to compensate for the loss of on-street parking, saying it was against council policy.

Paul Burden, acting transport and city streets manager, said it could create a costly precedent. Given the council was about to unroll a city-wide cycleway programme it needed to be careful about raising expectations that it would replace any on-street parking that was loss with dedicated off-street parking spaces.

Burden said staff were also concerned creating new off-street parking areas in an industrial area that was only populated during the day could lead to safety problems: "We're really concerned that these [off-street carparks] will become congregating areas for anti-social behaviour."

Mayor Lianne Dalziel said she could not support the boards' recommendations because they were asking for the council to spend money that was not on budget. The council was about to do a major review of its capital programme that was aimed at cutting costs, not adding to them.

Spreydon-Heathcote councillor Tim Scandrett argued the council had to do something. The area was busy before the quakes; now it was even busier and people were already struggling to find parks.

"We have to find a solution," Scandrett said.

Cr Paul Lonsdale said he could not support the boards' recommendations but suggested it was time the council looked at putting parking metres around suburban commercial hubs.

Councillors did vote in favour of installing 26 additional on-street parking spaces at the western end of Magdala Pl.