Independent commissioner Andrew Henderson, of Dunedin, was appointed by the council to hear its application to itself for land use consent to place six 30,000-litre tanks on a ridge southeast of the Omakau Golf Club rooms.
The tanks would replace the town's existing water reservoir.
He granted consent, subject to 12 conditions.
These included restricting the colour of the tanks to green and landscaping the site to screen the tanks when viewed from Leask St and the Otago Central Rail Trail.
The location of the tanks breach two district plan rules, by extending above a ridgeline when viewed from a public place and being only 5m from the nearest property boundary instead of a minimum of 10m.
The rules breached by the application take effect from October 11 and are among the 23 changes promoted by the council to address rural development issues.
Mr Henderson said the proposal was of benefit to Omakau residents as it would improve water pressure and provide increased water capacity.
"I find such positive effects outweigh any adverse visual effects associated with locating the water tanks on the skyline and ridgeline," Mr Henderson said.
The site is part of the Omakau Recreation Reserve and is leased by the golf club, which has given its approval for the reservoir.
Four submissions were received on the application, three in support and one in opposition, from the Central Otago Environmental Society.
The council's development engineer Peter Morton said the concrete tanks that held the town's existing water supply were in very poor condition and required urgent replacement.
The existing site was unsuitable for an upgrade of the water supply.
Mr Morton said the golf course site was closer to town and more elevated.
It was really the only suitable location for the reservoir and was not used by the golf club.
