Stockport Council's Executive has approved plans to borrow £18.5m to forward fund phase two of the Stockport Exchange development.
The council will access prudential loan facilities to fund construction of a 120-bed hotel, 50,000 sq ft of offices and public realm facilities in conjunction with development partner Muse Developments.
Stockport Council borrowed £15m in 2011 to fund the first phase of the development, which includes highway improvements and a 1,000-space multi-storey car park due to be completed by spring 2014.
A third phase will include further office development.
Stockport Council bought the 10.4 acre site in January 2011 for £15m from Deloitte, administrator of Targetfollow Property Holdings, a subsidiary of Targetfollow Group.
The scheme was known as Grand Central until last month.
Cllr Iain Roberts, executive member for economic development and regeneration at Stockport Council, said: "Once again we've shown our staunch commitment to regeneration by putting our money where our mouth is.
"The redevelopment of Stockport Exchange is crucial to the success of the town centre and the borough. Not acting now to secure its future is not an option.
"We've looked at the numbers very carefully to make sure this adds up for the people of Stockport.
"By using our preferential rates of borrowing, we can kick start phase two and attract further investment at a time when the private sector can't.
"The income generated will cover the cost of the loan and the wider benefits to the borough will be enormous. This scheme will create jobs for local people and vastly improve the town centre for residents, workers, commuters and visitors."
Wes Erlam, senior development surveyor at Muse, said: "The council's proactive approach will ensure phase two can go ahead and is a great boost to the scheme and to Stockport.
"This next phase of development will create a fantastic gateway into the town, resulting in high quality new facilities for both the public and business community."
Prudential borrowing is a loan system with preferential rates which can be used by local authorities to invest in fixed assets.
CBRE and DTZ are the joint agents for Stockport Exchange.