Details of the agreement were released at a press conference in the city on Monday.
Dunedin Mayor Dave Cull proclaimed the deal as a ''partnership'', saying the DCC and the developer - Betterways Advisory Ltd - both wanted a five-star hotel in Dunedin. Betterways director Steve Rodgers said they were now ''working together as a team''.
Pragmatic onlookers are likely to forgive the loved-up platitudes spoken and be relieved at news of the agreement.
Because, while undoubtedly much work has gone on behind the scenes, this is the first real public evidence that the council and the developer recognise the need for constructive, collaborative action.
The deal means council staff will work with Betterways to try to resolve traffic and ''connectivity'' issues at the site.
If solutions are agreed by both, the project will be referred to a new urban design panel to consider.
The panel will look at broader and more fundamental issues, including the hotel's height and appearance, to see if a compromise can be agreed.
The panel's membership would be agreed by both sides, but was expected to include academic architectural experts and others with relevant skills, recruited from within Dunedin and nationally, Mr Cull said.
It would make a final recommendation to both sides, but each would have to decide whether to accept the findings.
The process was expected to be completed before the end of the year, and, if accepted, the council would initiate a plan change to rezone the land, council chief executive Sue Bidrose said.
The plan change process would include public submissions and a hearing, but the zoning change would aim to suit the requirements of the hotel and avoid the need for a fresh resource consent application and hearing afterwards, she said.
The agreement also aims to avoid the need for an expensive Environment Court battle, which Mr Cull said could cost the council up to $300,000.
And while the matter could still end up in that court, Dr Bidrose estimated the cost to the council - should that eventuate - would instead be between $30,000 and $50,000.
She also - rightly - pointed out that opponents had a ''democratic right'' to object, which needed to be respected.
Details of the luxury 27-storey five-star hotel were first revealed in May 2012.
Mr Cull at the time said the proposal was not just ''nice to have'' (a sentiment he repeated several times this week, including the statement that ''This is important. This would be a major investment for the city and very beneficial'').
Mr Cull also assured the audience at the 2012 launch the then council chief executive Paul Orders was prepared to ''run out the red carpet, not red tape, in this instance''.
But, nearly two years on, the plan for the Wharf St site seemed stuck. Consent as proposed was denied under council planning rules and, as reported last month, backer Jing Song, of Queenstown, considered finding the way through complex planning issues a ''long shot''.
She said she had not given up hope and remained committed to Dunedin, but the delays and costs in pursuing the project - the figure put forward at the time as having already been spent on the project was $1 million - were frustrating.
As we said last month, had the project ended in such a manner it would have been disappointing.
Perhaps the hotel as planned is too tall and the site unsuitable.
This week, Mr Cull said all options were on the table as the two sides looked for ways to make the project work, including the hotel's height and appearance, although Betterways remained firmly fixed on developing its land at 41 Wharf St.
It is to be hoped that real progress on these matters can be made.
Of course, whether the signing of the memorandum of understanding will result in a hotel and apartment complex - on this location and of this design or any other - being approved remains to be seen.
But news the developer and the DCC are actively working together is encouraging.
