Mr Donaldson said without Te Puia's contribution, the project would not be going ahead. "We would not have done it if Te Puia hadn't stepped forward with their contribution. The only cost this project will have on the council and ratepayers will be consenting fees."
Mr Donaldson said the project would improve the section of the Te Ara Ahi National Cycleway which was used by hundreds of people daily.
"Over a three-month period in winter, we recorded 800 people using that section of the track and the numbers will only increase as we move into summer."
Mr Key said $970,000 would go towards maintaining and enhancing cycle trails from Northland to Southland, ensuring they continued to generate economic benefit to regional communities.
"The New Zealand Cycle Trail attracts high-value visitors and helps New Zealand stay on the international map as a top tourist destination.
"A recent report showed the trails are going from strength to strength. Last summer the New Zealand Cycle Trail experienced a 56 per cent average growth rate, with an estimated 97,000 trail users for the month of January 2014 alone."
A section of the Motu Trails in Opotiki has also been granted $15,000 for its improvement.
The 4km of existing trail along the Otara River stopbank between Te Rere Pa Rd and Memorial Park will be upgraded with cycle-friendly squeeze gates, some improved surfacing and better signs.
The next funding round will be in February.