The 105-room hotel, with a restaurant and bar, has been proposed for a vacant site next to the former Bush's Produce Store building on Williamson Street.

The proposal was subject to several community objections, which stood despite amendments to the initial plans.

Related content: Williamson Street hotel would have a 'profound' impact on heritage

Councillor Margaret O'Rourke spoke in favour of the proposal, while councillors Dave Fagg and Andrea Metcalf spoke against.

Staff recommended the council approve the application, because it was an acceptable outcome given the requirements of the City of Greater Planning Scheme.

Agenda minutes say the hotel will provide an "overall net community benefit".

Cr Metcalf said it was an item she would like to support, but was concerned by certain aspects.

She listed construction of an underground car park, building height and heritage issues as among her concerns.

Cr Metcalf said she was left confused by an assessment from Heritage Victoria, which did not object but raised concerns about the proposed building's effect on the former Bush's Produce Store complex.

She also raised concerns about overshadowing mid-winter, citing documents showing an 80-metre shadow at the winter solstice.

Cr Metcalf described the proposal as "premature" when weighed against existing planning controls.

Council budget 2021-22:

Cr O'Rourke - who voted in favour of approving the proposal - said the issue was not an easy one, as the council began to consider issues in the planning scheme around heritage, height and bulk.

She said developers had worked hard to accommodate concerns raised by Heritage Victoria and the city's heritage adviser.

"Living with the old and the new of our city is something we will continue to grapple with more and more," she said.

"The proposal is an acceptable outcome, in fact, taken on balance, it's a desirable outcome."

Cr O'Rourke pointed to the City Centre plan adopted in 2020, which described a need for conference facilities and 4.5-5 star hotel accommodation in Bendigo's CBD. She pointed to other buildings of height in the city centre, such as the planned new law courts.

Cr O'Rourke said she couldn't have supported the plan as it was initially put to council, but the applicant had worked hard to accommodate concerns.

Cr Fagg said the proposal brought into sharp relief issues related to balancing growth with heritage. He said Bendigo did need more hotel and residential accommodation in its city centre, but also needed to be careful.

Cr Fagg said there were several factors weighing against the proposal, including a 12-metre height mandated by overlays. He said he was also concerned the construction of an underground car park could disturb heritage buildings.

Amber Property Group initially proposed the $30 million plus hotel in May 2020.

Developers were unable to convince seven objectors to withdraw their concerns, despite revising plans.

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Most were worried about the design's bulk and height, as well as its external design. They also feared it would overshadow nearby St Paul's Cathedral bell tower.

The proposed site forms part of the former Bush's Store Complex, which is listed on the Victorian Heritage Register.

The proposed building has a contemporary design, including clear and light grey glazing, and custom designed and textured concrete panels.

Its main entrance would be from Williamson Street.

Heritage Victoria did not object to the development, but advised it had concerns that it would affect the registered setting of the former Bush's Store complex.

It called for more changes to the built form, to reduce height and bulk, in response to the significance of the complex.

Heritage Victoria re-iterated its concerns about height, despite revisions to the plans in the agenda report.

It's one of several proposals for high-end hotels in Bendigo made over the past 12 months.

The decision comes as the council voted to put its proposed 2021-22 budget out for public comment.

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