Northern Midlands Council has approved the $450 million Ridgeside Lane development east of Evandale, which will now be sent to the Planning Minister for approval.
The council was requested to pass an amendment to the Northern Tasmanian Regional Land Use Strategy, and received the support of other councils covered by the strategy.
The land was not previously earmarked for development in the document.
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Ridgeside Lane, proposed by developer Traders In Purple, includes 447 residential allotments ranging in size from 450-square-metres to 5500-square-metres.
There are also 44 larger rural living lots.
The proposal involves the development of a 100-room hotel with conference and wedding facilities, along with a village featuring a cafe, restaurant and cellar door, a sustainability centre, education hub and artisan village, workshops, studios and classrooms.
It also includes a retirement village with specialist aged care, palliative care and dementia care, and independent living units, and botanic gardens.
Traders In Purple chief executive officer Brett Robinson said the approval by Northern Midlands at its meeting this week came at the end of 18 months of work.
"Amendments to the NTRLUS require input and consideration from several regional council, which has been received by Northern Midlands Council," he said.
"It is very pleased to see councils working together to improve prospects of the entire region.
"Our financial forecast will see an inward investment of $450 million directly into the regional and state economies over the next 15 years."
The construction is proposed to start next year for the hotel, and be progressively completed until 2029 when the dementia village is opened. Housing development could be ongoing until 2034.
In the report to council, concerns were outlined from TasWater regarding the capacity of two reservoirs at Devon Hills which could be put under strain by this and other nearby developments.
"The addition of 2000 equivalent tenements from this development would increase the minimum storage requirement for the Devon Hills reservoirs, which supply Evandale, from approximately 4.0 megalitres to 7.9 ML - which exceeds the current reservoirs' capacity of 6.8 ML," the TasWater submission states.
"This summer we were already seeing some difficulties in re-filling the Mackinnons Hill reservoir, which feeds the Devon Hills reservoirs, following hot days.
"The proposed development would likely exacerbate such problems if additional storage is not provided for."
TasWater does not yet have a development strategy for Evandale, but the demand created by Ridgeside Lane will be responded to when a strategy is prepared.
All seven regional councils covered by the NTRLUS supported the proposal, provided Northern Midlands could demonstrate "the appropriateness of the specific proposal" when it comes before the Planning Minister. Break O'Day Council was keen to ensure sound strategic planning had been undertaken.
In responding to heritage impacts, a report to the Northern Midlands from a landscape architect stated that it should respond to "country town character" and long-term traffic management planning should be undertaken for the Midlands Highway.
The matter will now be considered by Planning Minister Roger Jaensch.