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Waterfall Park, a hotel and wellness centre, has been granted resource consent by the Queenstown Lakes District Council.
The development, which includes a conference centre, will be located alongside Mill Creek, between Arrowtown and Lake Hayes.
Winton Queenstown general manager Lauren Christie said the company was looking forward to progressing with the next stages of design and planning, including final discussions with potential hotel operators.
In conjunction with the proposed new access road through neighbouring Ayrburn Farm, the riparian margins of Mill Creek will be restored along a 1.3km stretch with native shrubs and grasses.
The development was opposed by residents and the Friends of Lake Hayes Society, which argued it could negatively affect water quality in the bodies of water.
Society member Kathleen O'Sullivan told commissioners at the development's January resource consent hearing ''it's a bit of a farce'' to suggest with any certainty the development would not lead to a breach of water quality standards as there was no strong scientific evidence to support that.
Queenstown architect John Blair, who lives near the site, said it was a ''disruptive and inappropriate proposal'', claiming it would cause increased traffic and a loss of visual amenity.
Following the decision, Friends of Lake Hayes Society secretary Richard Bowman said they were considering their options.
One option would be to appeal the decision, but he was ''certainly not convinced'' that was the best course of action.
Commissioners cited three main reasons for granting approval - it was designed to ensure no significant landscape effects, the plan to restore and re-use Ayrburn Farm heritage buildings, and steps proposed to mitigate adverse effects during construction.