Ottawa city council has approved a motion to consider moving a downtown-east light rail station and look into the possibility of building a connecting pedestrian tunnel to the National Arts Centre.

The city had originally planned to build an LRT station near Elgin Street, but revised the plan to move it further east under the Rideau Centre. The city said moving the station to the Rideau Centre could save more than $40 million.

The NAC and Elgin Street businesses had asked the city to reconsider the earlier plan, with Lord Elgin Hotel owner Jeff Gillin even offering to pay $2 million to keep the station nearby and asking council to delay Wednesday's vote.

The Gillin family withdrew its request for the delay, however, after meetings Tuesday night.

Council agreed to two motions on Wednesday: to consider a move a downtown east station closer to Metcalfe and O'Connor Streets to make it easier to connect that station to the NAC, and to investigate the possibility of a connecting tunnel to the NAC.

The city has asked the NAC to conduct a feasibility study to look at building a pedestrian tunnel connecting the downtown east station to an NAC entrance.

Transit activist says more downtown stations needed

Not everyone was pleased with the decision, however. Local community activist David Jeanes said the city's downtown LRT stations remain too far apart to effectively serve morning commuters.

"The large volume of pedestrian traffic eastward to and from Downtown East station will be forced to use the narrow sidewalks of Queen, Metcalfe and O'Connor [streets]," wrote Jeanes in a statement.

"There will also be a lot more pedestrian crossing of downtown streets, creating obstacles to automobile traffic and risk of injury to pedestrians," he wrote.

Loeb House saved from demolition

In a busy day at city hall, councillors also voted to spare a heritage building in favour of constructing a new Iraqi Embassy. Council voted against knocking down the Loeb House at 187 Lansdowne Road, a one-storey bungalow built in 1964 for Bertram and Blanche Loeb in Ottawa's Rockcliffe Park neighbourhood.

The Iraqi embassy wanted to rebuild a new structure at the site, but the city voted against major changes to the building.

Council also debated its authority on the limits of placing cell-phone towers throughout the city limits. Council said while Industry Canada has the final say on the location of the towers, they moved to launch a public consultation and then share the results of that consultation with Industry Canada.