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The Te Tai o Poutini Plan Committee, made up of councils and iwi, is proposing a mixed used commercial and residential zone near the CBD, with the aim of revitalising the area.
It has advised its planners to hold a separate consultation with Mawhera, the Maori landowners of much of the land in the town centre as they firm up the rules for the new zone.
A spokesman for the incorporation, Sam Wheelans, said the idea sprang from the Grey District Council's CBD redevelopment forum, of which Mawhera was a member.
"The town is desperately short of residential accommodation for all sectors of the community and the older buildings with historical significance and architectural flair lend themselves to residential apartments."
Mawhera Incorporation was looking forward to seeing the forum's recommendations incorporated in the draft Te Tai o Poutini Plan, he said.
- Lois Williams - Local democracy reporter