It would aim to create additional work for young people and those whose employment was affected by Covid-19.
Central Hawke's Bay mayor Alex Walker said the introduction of a non-seasonal, commercial-industrial agri-business promised to diversify the district's labour force and limit market shocks from the likes of drought.
"In this time of severe economic pressure, we look to business for the confidence to expand, invest, and provide the stimulus to give our community optimism," he said.
Work at the Brookvale, Havelock North, site, which has been plagued by odour complaints from neighbours, will include the expansion of the growing facilities and an upgrade of the existing composting facility.
The enclosure of the buildings and use of new bio-filter technology will aim to eliminate smell issues for Havelock North residents.
Construction at the Mt Herbert, Waipukurau, site will include the construction of a dam, which is already consented by Hawke's Bay Regional Council, so that it is self-sufficient.
After that, construction of composting and growing facilities will begin.
Te Mata Mushrooms currently employs 120 people.
"It is expected that up to 30 per cent of the more than 200 estimated additional workforce will be Māori," Jones said.
The construction is also expected to create 107 much-needed building and associated jobs in the region.
CHB District Council chief executive Monique Davidson said it would consider relevant applications for the proposed development and ensure a "robust" regulatory process was undertaken with the aim of balancing economic, environmental, social and cultural benefits.
The funding will come from the $3 billion set aside for infrastructure projects in the Government's Covid-19 Response and Recovery Fund.
